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 companys 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 thatpreparing 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 datafor March:

	Cost Formula	Actual Cost in March
Utilities	$16,600 + $0.16 per machine-hour	$21,120
Maintenance	$38,600 + $1.30 per machine-hour	$54,500
Supplies	$0.90 per machine-hour	$15,100
Indirect labor	$94,700 + $1.40 per machine-hour	$119,400
Depreciation	$67,800	$69,500

During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally plannedto work 17,000 machine-hours during March.

Required:

1. Without calculating any numbers, will the volume (activity) variances for these expenses be favorable orunfavorable? Justify your answer (1 short sentence is all you need).

Response:

2. Calculate the spending variances for March.

	Spending varianceamount	Favorable	SHOW YOUR CALCULATIONS !!
Utilities	$
Maintenance	$
Supplies	$
Indirect labor	$
Depreciation	$