You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company's operation.

1. The cash balance on December 1 is $43,200.
2. Actual sales for October and November and expected sales for December are as follows:

	October	November	December
Cash sales	$ 76,200	$ 70,800	84,400
Sales on account	$ 520,000	$ 527,000	$ 649,000

Sales on account are collected over a three-month period as follows: 20% collected in the month of sale, 60% collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible.

1. Purchase of inventory will total $ 370,000 for December. Thirty percent of a month's inventory purchases are paid during the month of purchase. The accounts payable remaining from November's inventory purchases total $ 193,000, all of which will be paid in December.
2. Selling and administrative expenses are budgeted at $ 433,000 for December.0 of this amount, $ 99,800 is for depreciation.
3. A new web server for the marketing Department costing $ 78,500 will be purchased for cash during December, and dividends totaling $ 18,500 will be paid during the month.
4. The company maintains a minimum cash balance of $20,000. An open line of credit is available from the company's bank to increase its cash balance as needed.

Required:

1. Calculate the expected cash collections for December.
2. Calculate the expected cash disbursement for merchandise purchase for December.
3. Prepare a cash budget for December. Indicate in the financing section any borrowing that will be needed during the month. Assume that any interest will not be paid until the following month.

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 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 determine the following cost formulas and gathered the following actual cost data for March:

	Cost formula	Actual cost in March
Utilities	$16,400 + $0.20 per machine-hour	$23,000
Maintenance	$ 38,800 + $ 1.50 per machine-hour	$ 68,600
Supplies	$0.80 per machine - hour	$ 19,000
Indirect labor	$ 94,200 + $1.20 per machine-hour	$123,900
Depreciation	$68,300	$ 70,000

During March, the company worked 22,000 machine hours and produced 16,000 units. The company had originally planned to work 24,000 machine hours during March.

Required:

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