Factory Overhead Cost Variance Report

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

Power and light

Indirect materials

Total variable cost

Fixed costs:

Supervisory salaries

Depreciation of plant and equipment

Insurance and property taxes

Total fixed cost

Total factory overhead cost

$$30,240$

$20,160$

$16,800$

$$67,200$

$$20,000$

$36,200$

$15,200$

During May, the department operated at $8,860$ 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.$

Required:

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. Enter a favorable variance

as a negative number using a minus sign and an unfavorable variance as a positive number. If an amount box does not require an entry, leave it blank.

Normal capacity for the month $8,400$ hrs$.$

Actual production for the month $8,860hrs.$