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You have just been hired by SecuriDoor Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company%u2019s costing system and %u201Cdo what you can to help us get better control of our manufacturing overhead costs.%u201D 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. |
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After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for April: |
| Cost Formula | Actual Cost in April | ||
| Utilities | $ 16,700 plus $.16 per machine hour | $ | 21,700 |
| Maintenance | $ 38,800 plus $1.50 per machine hour | $ | 62,600 |
| Supplies | $ .90 per machine hour | $ | 17,800 |
| Indirect labor | $ 94,600 plus $2.00 per machine hour | $ | 135,500 |
| Depreciation | $ 67,900 | $ | 69,600 |
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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. |
| 1. |
Prepare a flexible budget for April. (Input all amounts as positive values.) |
| SecuriDoor Corporation Flexible Budget For the Month Ended April 30 |
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| Machine hours | |
| Utilities | $ |
| Maintenance | |
| Supplies | |
| Indirect labor | |
| Depreciation | |
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| Total | $ |
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| 2. |
Prepare 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. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance).) |
| SecuriDoor Corporation Spending Variances For the Month Ended April 30 |
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| Flexible Budget |
Actual Results |
Spending variance | ||
| Utilities | $ | $ | $ | (Click to select) F U None |
| Maintenance | (Click to select) None F U | |||
| Supplies | (Click to select) F U None | |||
| Indirect labor | (Click to select) F U None | |||
| Depreciation | (Click to select) F U None | |||
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| Total | $ | $ | $ | (Click to select) F U None |
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