Question:
You have just been hired by SecuriDoor Corporation, the producer of a revolutionary new garage door opening device. The president has asked that you evaluate the company's costing system and "do what you will 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 that preparing such a budget could be an excellent first step in overhead planning and control.
After much effort and analysis, you determined the subsequent cost formulas and gathered the given actual cost data for April:
Cost Formula Actual Cost in April
Utilities $16,700 plus $.18 per machine-hour $ 22,100
Maintenance $38,200 plus $1.50 per machine-hour $ 62,000
Supplies $.40 per machine-hour $ 7,800
Indirect labor $94,800 plus $1.20 per machine-hour $ 119,700
Depreciation $68,000 $ 69,700
During April, the company worked 18,000 machine-hours and produced 12,000 units. The company had originally planned to work 20,000 machine-hours during April.
Required:
1. Complete a report showing the activity variances for April. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Show the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
SecuriDoor Corporation
Activity Variances
For the Month Ended April 30
Utilities $
Maintenance
Supplies
Indirect labor
Depreciation
Total $
2. Complete a report showing the spending variances for April. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Show the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)
SecuriDoor Corporation
Spending Variances
For the Month Ended April 30
Utilities $
Maintenance
Supplies
Indirect labor
Depreciation
Total $