You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The pre

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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 and analysis, you determined the followingcost formulas and gathered the following actual cost data forMarch:
During March, the company worked 16,000 machine-hours andproduced 10,000 units. The company had originally planned to work18,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March.