Chapter 23 Evaluating Variances from Standard Costs1163 PR 23-4A Factory overhead cost variance report Tiger Equipment Inc., a manufacturer of construction equipment, prepared the follow- ing factory overhead cost budget year. The company 8,400 hours. OBJ. 4 for the Welding Department for May of the current expected to operate the department at 100% of normal capacity of Variable costs Indirect factory wages Power and light Indirect materials $30,240 20,160 16,800 Total variable cost 67,200 Fixed costs Supervisory salaries Depreciation of plant and equipment Insurance and property taxes $20,000 36,200 15,200 Total fixed cost 71,400 $138,600 Total factory overhead cost During May, the department operated at 8,860 standard hours. 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. TIGER EQUIPMENT INC. Factory Overhead Cost Variance Report Welding Department For the Month Ended May 31 Normal capacity for the month: Actual production for the month hours hours Budget (at actual production) Variances Actual Unfavorable Favorable Variable costs: Indirect factory wages Power and light Indirect materials Total variable cost Fixed costs Supervisory salaries Depreciation of plant and equip Insurance and property taxes Total fixed cost Total factory overhead cost Total controllable variances Net controllable variance-(favorable) unfavorable Idle (Excess) Hours x Fixed Factory OH Rate Volume variance-/(fav.) unfav Total factory overhead cost variance-(favorable) unfavorable Pr. 23-4A Type here to search Alternative Computation of Overhead Variances: Factory Overhead Actual costs Balance costs Actual Factory Overhead Budgeted Factory Overhead for Amount Produced Appled Factory Overhead Variable cost Foxed cost Total Volume Variance Variance Total Factory Overhead Cost Variance Supporting calculation: Variable factory overhead rate: Budgeted total variable cost Budgeted hours Variable factory overhead rate Foxed factory overhead rate: Total foxed costs Productive capacity hours Fxed factory overhead rate Total Actual hours Applied costs