DataP9-2. Activity and Spending variances. You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president as 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 abudget would be an excellent first step in overhead planning and control. After much effort and analysis you determine the following cost formulas and gathered the following actual costs and data for March. Cost Formula Actual Cost Description $20,600 plus $0.10 per machine hour Utilities $24,200 $78,100 $40,000 plus $1.60 per machine hour Maintenance $8,400 Supplies $0.30 per machine hour $149,600 Indirect labor $130,000 plus $0.70 per machine hour $70,000 $71,500 Depreciation During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March. Required 1. Prepare a report showing the activity variances for March. Explain what these variances mean. 2. Prepare a report showing the spending variances for March. Explain what these variances mean