1. 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 + $0.20 per machine-hour	$ 21,600
Maintenance	$38,400 + $1.20 per machine-hour	$ 52,600
Supplies	$0.40 per machine-hour	$ 6,600
Indirect labor	$94,500 + $1.70 per machine-hour	$ 124,300
Depreciation	$67,800	$ 69,500

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

Required:

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

2. Milano Pizza has a small area for in-store dining as well as offers take-out and free home delivery services. The pizzerias owner determined the shop has two major cost driversthe number of pizzas sold and the number of deliveries made.

The pizzerias cost formulas appear below:

	Fixed Cost per Month	Cost per Pizza	Cost per Delivery
Pizza ingredients		$ 4.30
Kitchen staff	$ 6,330
Utilities	$ 820	$ 0.40
Delivery person			$ 3.20
Delivery vehicle	$ 840		$ 1.30
Equipment depreciation	$ 568
Rent	$ 2,290
Miscellaneous	$ 940	$ 0.20

In November, the pizzeria budgeted for 2,190 pizzas at an average selling price of $20 per pizza and for 190 deliveries.

Data concerning the pizzerias actual results in November were as follows:

	Actual Results
Pizzas	2,290
Deliveries	170
Revenue	$ 46,560
Pizza ingredients	$ 10,990
Kitchen staff	$ 6,270
Utilities	$ 990
Delivery person	$ 544
Delivery vehicle	$ 1,028
Equipment depreciation	$ 568
Rent	$ 2,290
Miscellaneous	$ 916

Required:

1. Complete the flexible budget performance report for November.

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.