Question

After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Cost Formula Actual Cost in March Utilities $16,700 plus $0.15 per machine-hour $ 21,650 Maintenance $38,100 plus $2.00 per machine-hour $ 73,900 Supplies $0.40 per machine-hour $ 8,200 Indirect labor $95,000 plus $1.20 per machine-hour $ 121,100 Depreciation $67,900 $ 69,600 During March, the company worked 19,000 machine-hours and produced 13,000 units. The company had 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.

FAB Corporation
Activity Variances
For the Month Ended March 31
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
Total

FAB Corporation
Spending Variances
For the Month Ended March 31
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
Total

Answer 1

				Flexible	Activity variance		planned
		Fixed	variable	budget			budget
Machine hours				19,000			21,000
utilities		16,700	0.15	19550	300	F	19850
maintenance		38,100	2	76100	4000	F	80100
supplies			0.4	7600	800	F	8400
indirect labor		95,000	1.2	117800	2400	F	120200
Depreciation		67,900		67,900	0	N	67,900
totale xpense			3.75	288950	7500	F	296450
				Flexible	Sepnding variance		Actual
		Fixed	variable	budget			budget
Machine hours				19,000			19,000
utilities		16,700	0.15	19550	2100	U	21,650
maintenance		38,100	2	76100	2,200	F	73,900
supplies			0.4	7600	600	U	8,200
indirect labor		95,000	1.2	117800	3300	U	121,100
Depreciation		67,900		67,900	1,700	U	69,600
totale xpense			3.75	288950	5500	U	294450