Factory Overhead Cost Variance Report Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October 2014. The company expected to operate the department at 100% of normal capacity of 30,000 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 $247,500 189,000 52,500 $126,000 70,000 44,000 $489,000 240,000 $729,000 During October, the department operated at 28,500 hours, and the factory overhead costs incurred were indirect factory wages, $234,000; power and light, $178,500; indirect materials, $50,600; supervisory salaries, $126,000; depreciation of plant and equipment, $70,000; and insurance and property taxes, $44,000.
Factory Overhead Cost Variance Report Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October 2014. The company expected to operate the department at 100% of normal capacity of 30,000 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 $247,500 189,000 52,500 $126,000 70,000 44,000 $489,000 240,000 $729,000 During October, the department operated at 28,500 hours, and the factory overhead costs incurred were indirect factory wages, $234,000; power and light, $178,500; indirect materials, $50,600; supervisory salaries, $126,000; depreciation of plant and equipment, $70,000; and insurance and property taxes, $44,000.
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:Factory Overhead Cost Variance Report
Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October 2014. The
company expected to operate the department at 100% of normal capacity of 30,000 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
$247,500
189,000
52,500
$126,000
70,000
44,000
$489,000
240,000
$729,000
During October, the department operated at 28,500 hours, and the factory overhead costs incurred were indirect factory wages, $234,000; power and light, $178,500; indirect materials,
$50,600; supervisory salaries, $126,000; depreciation of plant and equipment, $70,000; and insurance and property taxes, $44,000.
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