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 over head 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 over head planning and control After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost in March S24,200 S78,100 Cost Formula Utilities $20,600 + $0.10 per machine hour Maintenance $40,000+ $1.60 per machine hour Supplies $0.30 per machine hour Indirect labor $130,000+ $0.70 per machine hour Depreciation $70,000 $8.400 $149,600 $71,500 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. Calculate the activity variances for March. (Hint: Refer to Exhibit 9-6.) Explain what these variances mean. 2. Calculate the spending variances for March. (Hint: Refer to Exhibit 9.7.) Explain what these variances mean. 1. Prepare the planning budget for March 2. Prepare the flexible budget for March 3. Calculate activity variances and indicate if they are favorable or unfavorable) 4. Calculate spending variances (and indicate if they are favorable or unfavorable)