You have just been hired by FAB Corporation, the manufacturer ofa revolutionary new garage door opening device. The president hasasked that you review the company’s costing system and “do what youcan to help us get better control of our manufacturing overheadcosts.” You find that the company has never used a flexible budget,and you suggest that preparing such a budget would be an excellentfirst step in overhead planning and control. After much effort andanalysis, you determined the following cost formulas and gatheredthe following actual cost data for March:
| Cost Formula | Actual Cost in March |
| Utilities | $16,900 + $0.21 per machine-hour | $ | 22,690 |
| Maintenance | $38,700 + $1.30 per machine-hour | $ | 57,200 |
| Supplies | $0.60 per machine-hour | $ | 11,200 |
| Indirect labor | $94,400 + $1.70 per machine-hour | $ | 127,600 |
| Depreciation | $68,400 | $ | 70,100 |
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During March, the company worked 17,000 machine-hours andproduced 11,000 units. The company had originally planned to work19,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March.
