Cost Formula Actual Cost in March Utilities $16,300 + $0.15 per machine-hour $ 20,800 Maintenance $38,200 + $1.40 per machine-hour $ 57,200 Supplies $0.60 per machine-hour $ 10,600 Indirect labor $94,000 + $1.80 per machine-hour $ 127,300 Depreciation $68,000 $ 69,700 During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000 machine-hours during March. Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March.

The activity variances are the difference between the costs of actual activity and the costs of planned activity. The planned machine hours were 18000

1. Activity Variances

Particulars Flexible Actual Activity

at 18000 at 16000 Variances

Utilities 19,000 20,800 1,800 U

Maintenance 63,400 57,200 6,200 F

Supplies 10,800 10,600 200 F

Indirect Labor 126,400 127,300 900 U

Depreciation 76,500 69,700 6 ,800 F

Total 10,500 F

2. Spending Variance

Particulars Flexible Actual Activity

at 16000 at 16000 Variances

Utilities 18,700 20,800 2,100 U

Maintenance 60,600 57,200 3,400 F

Supplies 9,600 10,600 1000 U

Indirect Labor 122,800 127,300 4,500 U

Depreciation 68,000 69,700 1,700 U

Total 5,900 U

WORKING

Flexible Budgeted Costs for 18000 machine hours in March

Utilities $16,300 + $0.15 (18000) = $16,300 + $2700 = $ 19,000

Maintenance $38,200 + $1.40(18000)= $ 38,200 + $25,200= $ 63,400

Supplies $0.60 (18000)= $ 10,800

Indirect labor $94,000 + $1.80 (18000)= $94,000 + $ 32,400= $ 126,400

Depreciation $68,000 $ 69,700

Budgeted Costs in March

Utilities $16,300 + $0.15 (16000) = $16,300 + $2400 = $ 18,700

Maintenance $38,200 + $1.40(16000)= $ 38,200 + $22,400= $ 60,600

Supplies $0.60 (16000)= $ 9,600

Indirect labor $94,000 + $1.80 (16000)= $94,000 + $ 28,800= $ 122,800

Depreciation $68,000 $ 69,700

Actual Cost in March

Utilities $16,300 + $0.15 per machine-hour $ 20,800

Maintenance $38,200 + $1.40 per machine-hour $ 57,200

Supplies $0.60 per machine-hour $ 10,600

Indirect labor $94,000 + $1.80 per machine-hour $ 127,300

Depreciation $68,000 $ 69,700

Machine Hours in March 16,000

Units produced 10,000 units.

Budgeted Machine Hours 18000

Budgeted Costs in March

Utilities $16,300 + $0.15 (18000) = $16,300 + $2700 = $ 19,000

Maintenance $38,200 + $1.40(18000)= $ 38,200 + $25,200= $ 63,400

Supplies $0.60 (18000)= $ 10,800

Indirect labor $94,000 + $1.80 (18000)= $94,000 + $ 32,400= $ 126,400

Depreciation $68,000 $ 69,700

Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March.