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Problem 9-18 (Algo) Activity and Spending Variances [LO9-1, LO9-2, LO9-3] 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 $16,000 + $0.15 per machine-hour $38,200 + $1.70 per machine-hour $0.50 per machine-hour $94,900 + $1.90 per machine-hour $67,600 Actual Cost in March $ 20,800 $ 66,000 $ 9,800 $133,800 $ 69, 300 During March, the company worked 18,000 machine-hours and produced 12,000 units. The company had originally planned to work 20,000 machine-hours during March Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the activity variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) FAB Corporation Activity Variances For the Month Ended March 31 Utilities Maintenance Supplies Required 1 Required 2 Calculate the spending variances for March. (Indicate the effect of each variance by selecting for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance) Input all amounts as positive values.) FAB Corporation Spending Variances For the Month Ended March 31 Utilities Maintenance Supplies Case 9-25 (Algo) Critiquing a Report; Calculating Spending Variances (LO9-3, LO9-5) Boyne University offers an extensive continuing education program in many cities throughout the state. For the convenience of its faculty and administrative staff and to save costs, the university operates a motor pool. The motor pool's monthly planning budget is based on operating 23 vehicles; however, for the month of March the university purchased one additional vehicle. The motor pool furnishes gasoline, oil, and other supplies for its automobiles. A mechanic does routine maintenance and minor repairs. Major repairs are performed at a nearby commercial garage The following cost control report shows actual operating costs for March of the current year compared to the planning budget for March Boyne University Motor Pool Cost Control Report For the Month Ended March 31 March Actua (Over) Under Budget Miles Autos Planning Budget 50, 300 23 58,300 24 Gasoline Oil, minor repairs, parts Outside repairs Insurance Salaries and benefits Vehicle depreciation Total $ 10,528 4,360 1,160 1,915 8,610 4,872 $ 31,445 $ 9,557 4,024 989 1,794 8,610 4,669 $ 29,643 $ (971) (336) (171) (121) 0 (203) $ (1,802) The planning budget was based on the following assumptions: a. $0.19 per mile for gasoline b. $0.08 per mile for oil, minor repairs, and parts. c $43 per automobile per month for outside repairs. d. $78 per automobile per month for insurance. e. $8,610 per month for salaries and benefits f $203 per automobile per month for depreciation. The supervisor of the motor pool is unhappy with the report, claiming it paints an unfair picture of the motor pool's performance The planning budget was based on the following assumptions: a. $0.19 per mile for gasoline b. $0.08 per mile for oil, minor repairs, and parts. c. $43 per automobile per month for outside repairs. d. $78 per automobile per month for insurance. e. $8,610 per month for salaries and benefits. f. $203 per automobile per month for depreciation. The supervisor of the motor pool is unhappy with the report, claiming it paints an unfair picture of the motor pool's performance Required: 1 Calculate the spending variances for March (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Boyne University Motor Pool Spending Variances For the Month Ended March 31 Gasoline Oil, minor repairs, parts Outside repairs Insurance Salaries and benefits Vehicle depreciation Total