Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May 2014. The company expected to operate the department at 100% of normal capacity of 8,400 hours.

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 8,860hours.

Transcribed Image Text:

Variable costs: indirect factory wages Power and light Indirect materials 530,240 20,160 Total variable cost 67,200 Rxed costs: Supervisory salaries Depreciation of plant and equipment Insurance and property taxes $20,000 36,200 Total fixed cost Total factory overhead cost 71.400 $138,600