Tannin Products Inc. prepared the following factory overhead cost budget for the Trim variance, $900 U Department for July 2014, during which it expected to use 20,000 hours for production:

Variable overhead cost:

Indirect factory labor	$46,000
Power and light	12,000
Indirect materials	20,000
Total variable overhead cost Fixed overhead cost:		$ 78,000
Supervisory salaries	$54,500
Depreciation of plant and equipment	40,000
Insurance and property taxes	35,500

Total fixed overhead cost

Total factory overhead cost

Tannin has available 25,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 22,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows:

Actual variable factory overhead cost:

Indirect factory labor $49,700

Power and light 13,000

Indirect materials 24,000

Total variable cost $86,700

Construct a factory overhead cost variance report for the Trim Department for July.

7-20 Recording standards in accounts OBJ. 5

Cioffi Manufacturing Company incorporates standards in its accounts and identifies variances at the time the manufacturing costs are incurred. Journalize the entries to record the following transactions:

Purchased 2,450 units of copper tubing on account at $52.00 per unit. The standard price is $48.50 per unit.

Used 1,900 units of copper tubing in the process of manufacturing 200 air conditioners. Ten units of copper tubing are required, at standard, to produce one air conditioner.

TANNIN PRODUCTS INC.

Factory Overhead Cost Variance ReportTrim Department

For the Month Ended July 31, 2014

Productive capacity for the month:

25,000

hours

Actual productive capacity used for the month:

22,000

hours

Budget

(at actual

Variances

production)

Actual

Favorable

Unfavorable

Alternative Computation of Overhead Variances:

Variable factory overhead costs:

Indirect factory labor

$ 3,700

*

$ 49,700

$ (3,700)

*

$ (3,700)

*

Factory Overhead

Power and light

12,000

*

13,000

-

*

Actual costs

Applied costs

Indirect materials

20,000

*

24,000

-

Balance

Total

$ 78,000

*

$ 86,700

Fixed factory overhead costs:

Supervisory salaries

$ 54,500

$ 8,500

*

Depreciation of plant and equip.

40,000

Actual Factory

Budgeted Factory Overhead

Applied Factory

Insurance and property taxes

35,500

Overhead

for Amount Produced

Overhead

Total

$ 130,000

Variable cost

Total factory overhead cost

$ -

*

Fixed cost

Total controllable variances

Total

Net controllable variance(favorable) unfavorable

900

Idle Hours

Fixed Factory OH Rate

Volume variance(fav.) unfav.

$130,000.00

*

Controllable

Volume

Total factory overhead cost variance(favorable) unfavorable

Variance

Variance

Total Factory

Overhead

Cost Variance

Supporting calculation:

Variable factory overhead rate:

Budgeted total variable cost

$ 78,000

Budgeted hours

20,000

Variable factory overhead rate

$3.90

Fixed factory overhead rate:

Total fixed costs

$130,000

Productive capacity hours

25,000

Fixed factory overhead rate

Total

Actual hours

Applied costs