Factory overhead cost variance report OBJ. 4 Tiger Equipment Inc., a manufacturer of construction equipment, prepared the
Question:
Factory overhead cost variance report OBJ. 4 Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year.
The company expected to operate the department at 100% of normal capacity of 8,400 hours.
Variable costs:
Indirect factory wages $30,240 Power and light 20,160 Indirect materials 16,800 Total variable cost $ 67,200 Fixed costs:
Supervisory salaries $20,000 Depreciation of plant and equipment 36,200 Insurance and property taxes 15,200 Total fixed cost 71,400 Total factory overhead cost $138,600 During May, the department operated at 8,860 standard hours, and the factory overhead costs incurred were indirect factory wages, $32,400; power and light, $21,000; indirect materials, $18,250; supervisory salaries, $20,000; depreciation of plant and equipment,
$36,200; and insurance and property taxes, $15,200.
Instructions Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,860 hours.
Step by Step Answer:
Financial And Managerial Accounting
ISBN: 9781305267831,9781305267848
13th Edition
Authors: Carl S. Warren , James M. Reeve , Jonathan Duchac