D: Flexible Budgets and Variances: You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,800 $0.12 per machine-hour $38,600+ $1.30 per machine-hour $0.80 per machine-hour $94,100 + $1.90 per machine-hour $68,200 Actual Cost in March $ 20,880 $ 57,100 $ 15,000 $131,100 $ 69,900 During March, the company worked 17,000 machine-hours and produced 11,000 units. The company had originally planned to work 19,000 machine-hours during March. Required: 1. Without calculating any numbers, will the volume (activity) variances for these expenses be favorable or unfavorable? Justify your answer (1 short sentence is all you need). Response: Favorable since they are generating more than expected Spending variance amount 2. Calculate the spending variances for March. Favorable Utilities $ Maintenance $ Supplies $ Indirect labor Depreciation $ SHOW YOUR CALCULATIONS !! Use the following data to answer the next FOUR (4) questions: The following performance report has been prepared for Wonder Corporation for February, Due to an unknown computer error, there are some numbers missing in the flexible budget portion of the report. Sales/Cost Formula Static Budget Flexible Budget Actual Results Number of Units ?? 18,000 18,000 Sales $50 per unit 860,000 900,000 925,000 Less variable costs Direct Materials $12 per unit (206,400) (216,000) (236,500) Direct Labor $9 per unit (154,800) ??? (176,000) Manufacturing Overhead $5 per unit (86,000) ??? (88,000) Selling & admin. $2 per unit (34,400) (36,000) (34,700) Contribution margin 378,400 ??? 389,800 Less fixed costs Manufacturing Overhead $ 36,000 (36,000) (36,000) (35,500) Selling & admin. $ 74,000 (74,000) ??? (72,600) Net Income $ 268,400 ??? $ 281,700 What number should be reported for the Number of Units in the Flexible Budget? What is the Sales Price Variance for February? What is the direct material cost Volume Variance for February? What is the fixed manufacturing overhead Price Variance for February? es $ $ $ $