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 asked you to review the companys costing system and do what you can to help us get better control of our manufacturing overhead costs. You find the company has never used a flexible budget, and you suggest preparing such a budget would be an excellent first step in overhead planning and control.

After much effort and analysis, you estimated the following cost formulas and gathered the following actual cost data for March:

	Cost Formula	Actual Cost in March
Utilities	$16,400 + $0.13 per machine-hour	$ 20,930
Maintenance	$38,600 + $1.80 per machine-hour	$ 70,200
Supplies	$0.30 per machine-hour	$ 6,100
Indirect labor	$94,400 + $1.80 per machine-hour	$ 133,100
Depreciation	$67,600	$ 69,300

During March, the company worked 19,000 machine-hours and produced 13,000 units. The company originally planned to work 21,000 machine-hours during March.

Required:

1. Calculate the activity variances for March.
2. Calculate the spending variances for March

Calculate the activity variances for March.

Note: 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		F
Supplies
Indirect labor
Depreciation
Total

Calculate the spending variances for March.

Note: 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
Spending Variances
For the Month Ended March 31
Utilities		U
Maintenance		U
Supplies		F
Indirect labor		U
Depreciation	0	None
Total		U