Factory overhead cost variance report OBJ. 4 Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October of the current year. The company expected to operate the department at 100% of normal capacity of 30,000 hours.

Variable costs:

Indirect factory wages $247,500 Power and light 189,000 Indirect materials 52,500 Total variable cost $489,000 Fixed costs:

Supervisory salaries $126,000 Depreciation of plant and equipment 70,000 Insurance and property taxes 44,000 Total fixed cost 240,000 Total factory overhead cost $729,000 During October, the department operated at 28,500 hours, and the factory overhead costs incurred were indirect factory wages, $234,000; power and light, $178,500; indirect materials, $50,600; supervisory salaries, $126,000; depreciation of plant and equipment,

$70,000; and insurance and property taxes, $44,000.

Instructions Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 28,500 hours.

Standards for nonmanufacturing expenses for a service company OBJ. 3, 6