Question
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.
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 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.
Tiger Equipment Inc. | ||||
Factory Overhead Cost Variance Report-Welding Department | ||||
For the Month Ended May 31 | ||||
Normal capacity for the month 8,400 hrs. | ||||
Actual production for the month 8,860 hrs. | ||||
Actual Cost | Budget (at Actual Production) | Unfavorable Variances | Favorable Variances | |
Variable factory overhead costs: | ||||
Indirect factory wages | $ | $ | $ | $ |
Power and light | ||||
Indirect materials | ||||
Total variable cost | $ | $ | ||
Fixed factory overhead costs: | ||||
Supervisory salaries | $ | $ | ||
Depreciation of plant and equipment | ||||
Insurance and property taxes | ||||
Total fixed cost | $ | $ | ||
Total factory overhead cost | $ | $ | ||
Total controllable variances | $ | $ | ||
$ | ||||
Volume variancefavorable: | ||||
Excess hours used over normal at the standard rate for fixed factory overhead | ||||
$ |
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