Can somebody help me with this? The polishing department of Taylor Manufacturing Company operated during April 2019 with the following manufacturing overhead cost budget based on 4,000 hours of monthly productive capacity: TAYLOR MANUFACTURING COMPANYPolishing DepartmentOverhead Budget (4,000 hours)for the month of April 2019 Variable costs: Factory supplies $100,000 Indirect labor 152,000 Utilities (usage charge) 68,000 Patent royalties on secret process 296,000 Total variable overhead $616,000 Fixed costs: Supervisory salaries $160,000 Depreciation on factory equipment 144,000 Factory taxes 48,000 Factory insurance 32,000 Utilities (base charge) 80,000 Total fixed overhead $464,000 Total manufacturing overhead $1,080,000 The polishing department was operated for 4,600 hours during April and incurred the following manufacturing overhead costs: Factory supplies $97,520 Indirect labor 136,160 Utilities (usage factor) 82,800 Utilities (base factor) 96,000 Patent royalties 280,416 Supervisory salaries 168,000 Depreciation on factory equipment 144,000 Factory taxes 56,000 Factory insurance 32,000 Total manufacturing overhead incurred 1,092,896 Using a flexible budgeting approach, prepare a performance report for the polishing department for April 2019, comparing actual overhead costs with budgeted overhead costs for 4,600 hours. Separate overhead costs into variable and fixed components and show the amounts of any variances between actual and budgeted amounts.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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The polishing department of Taylor Manufacturing Company operated during April 2019 with the following
TAYLOR MANUFACTURING COMPANY
Polishing Department
Overhead Budget (4,000 hours)
for the month of April 2019
| Variable costs: | ||
| Factory supplies | $100,000 | |
| Indirect labor | 152,000 | |
| Utilities (usage charge) | 68,000 | |
| Patent royalties on secret process | 296,000 | |
| Total variable overhead | $616,000 | |
| Fixed costs: | ||
| Supervisory salaries | $160,000 | |
| |
144,000 | |
| Factory taxes | 48,000 | |
| Factory insurance | 32,000 | |
| Utilities (base charge) | 80,000 | |
| Total fixed overhead | $464,000 | |
| Total manufacturing overhead | $1,080,000 |
The polishing department was operated for 4,600 hours during April and incurred the following manufacturing overhead costs:
| Factory supplies | $97,520 |
| Indirect labor | 136,160 |
| Utilities (usage factor) | 82,800 |
| Utilities (base factor) | 96,000 |
| Patent royalties | 280,416 |
| Supervisory salaries | 168,000 |
| Depreciation on factory equipment | 144,000 |
| Factory taxes | 56,000 |
| Factory insurance | 32,000 |
| Total manufacturing overhead incurred | 1,092,896 |
Using a flexible budgeting approach, prepare a performance report for the polishing department for April 2019, comparing actual overhead costs with budgeted overhead costs for 4,600 hours. Separate overhead costs into variable and fixed components and show the amounts of any variances between actual and budgeted amounts.
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