Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October of the current year. The company expected to operate the department at 100% of normal capacity of 30,000 hours. Variable costs: Indirect factory wages $247,500 Power and light 189,000 Indirect materials 52,500 Total variable cost $489,000 Fixed costs: Supervisory salaries $126,000 Depreciation of plant and equipment 70,000 Insurance and property taxes 44,000 Total fixed cost 240,000 Total factory overhead cost $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. Required: Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 28,500 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. Feeling Better Medical Inc. Factory Overhead Cost Variance Report-Assembly Department For the Month Ended October 31 Normal capacity for the month 30,000 hrs. Actual production for the month 28,500 hrs. ActualCost Budget(at ActualProduction) UnfavorableVariances FavorableVariances 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 variance—unfavorable: Idle hours at the standard rate for fixed factory overhead $
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following
| Variable costs: | ||
| Indirect factory wages | $247,500 | |
| Power and light | 189,000 | |
| Indirect materials | 52,500 | |
| Total variable cost | $489,000 | |
| Fixed costs: | ||
| Supervisory salaries | $126,000 | |
| Depreciation of plant and equipment | 70,000 | |
| Insurance and property taxes | 44,000 | |
| Total fixed cost | 240,000 | |
| Total factory overhead cost | $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.
Required:
Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 28,500 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.
| Feeling Better Medical Inc. | ||||
| Factory Overhead Cost Variance Report-Assembly Department | ||||
| For the Month Ended October 31 | ||||
| Normal capacity for the month 30,000 hrs. | ||||
| Actual production for the month 28,500 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 variance—unfavorable: | ||||
| Idle hours at the standard rate for fixed factory overhead | ||||
| $ |
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