Prepare a factory overhead cost budget, separating variable and fixed costs. Assume that factory insurance and depreciation are the only fixed factory costs.
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.
Sweet Tooth Candy Company budgeted the following costs for anticipated production for August:
| Advertising expenses | $232,000 |
| Manufacturing supplies | 14,000 |
| Power and light | 48,000 |
| Sales commissions | 298,000 |
| Factory insurance | 30,000 |
| Production supervisor wages | 135,000 |
| Production control wages | 32,000 |
| Executive officer salaries | 310,000 |
| Materials management wages | 39,000 |
| Factory |
22,000 |
Prepare a factory
Sweet Tooth Candy CompanyFactory Overhead Cost BudgetFor the Month Ending August 31
| Variable factory overhead costs: | ||
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$- Select - | |
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| Total variable factory overhead costs | $fill in the blank 11 | |
| Fixed factory overhead costs: | ||
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$- Select - | |
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- Select - | |
| Total fixed factory overhead costs | fill in the blank 16 | |
| Total factory overhead costs | $fill in the blank 17 |
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