Seabury, Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October 2012. The company expected to operate the department at 100% of normal capacity of 25,000 hours.

During October, the department operated at 23,500 hours, and the factory overhead costs incurred were indirect factory wages, $140,500; power and light, $28,600; indirect materials, $15,220; supervisory salaries, $125,000; depreciation of plant and equipment, $49,000; and insurance and property taxes, $29,750.

Instruction

Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 23,500 hours.

Transcribed Image Text:

Variable costs: Indirect factory wages $150,000 29,500 Power and light Indirect materials 17,000 Total variable cost $196,500 Fixed costs: Supervisory salaries Depreciation of plant and equipment $125,000 49,000 Insurance and property taxes Total fixed cost 29,750 203,750 $400,250 Total factory overhead cost