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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 ?odo what you...

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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 ?odo 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 that preparing 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 data for March:


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. Prepare a report showing the activity variances for March. Explain what these variances mean.
2. Prepare a report showing the spending variances for March. Explain what these variancesmean.
Answered Same Day Dec 24, 2021

Solution

David answered on Dec 24 2021
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