The Finishing Department of Pinnacle Manufacturing Co. prepared the following factory overhead cost budget for October of the current year, during which it expected to operate at a 100% capacity of 10,000 machine hours. Variable costs: Indirect factory wages $18,000 Power and light 12,000 Indirect materials 4,000 Total variable cost $34,000 Fixed costs: Supervisory salaries $12,000 Depreciation of plant and equipment 8,800 Insurance and property taxes 3,200 Total fixed cost 24,000 Total factory overhead $58,000 During October, the plant was operated for 9,000 machine hours and the factory overhead costs incurred were as follows: indirect factory wages, $16,400; power and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of plant and equipment, $8,800; insurance and property taxes, $3,200. Prepare a factory overhead cost variance report for October.
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.
The Finishing Department of Pinnacle Manufacturing Co. prepared the following
| Variable costs: | ||
| Indirect factory wages | $18,000 | |
| Power and light | 12,000 | |
| Indirect materials | 4,000 | |
| Total variable cost | $34,000 | |
| Fixed costs: | ||
| Supervisory salaries | $12,000 | |
| |
8,800 | |
| Insurance and property taxes | 3,200 | |
| Total fixed cost | 24,000 | |
| Total factory overhead | $58,000 |
During October, the plant was operated for 9,000 machine hours and the factory overhead costs incurred were as follows: indirect factory wages, $16,400; power and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of plant and equipment, $8,800; insurance and property taxes, $3,200.
Prepare a factory overhead cost variance report for October. (The budgeted amounts for actual amount produced should be based on 9,000 machine hours.) Enter all amounts as positive numbers. If an amount box does not require an entry, leave it blank.
| Pinnacle Manufacturing Co.—Finishing Department | ||||
| Factory Overhead Cost Variance Report | ||||
| For the Month Ended October 31 | ||||
| Productive capacity for the month | fill in the blank 1 | hours | ||
| Actual production for the month | fill in the blank 2 | hours | ||
| Budget | Actual | Favorable Variances | Unfavorable Variances | |
| Variable factory overhead costs: | ||||
| Indirect factory wages | $fill in the blank 3 | $fill in the blank 4 | $fill in the blank 5 | $fill in the blank 6 |
| Power and light | fill in the blank 7 | fill in the blank 8 | fill in the blank 9 | fill in the blank 10 |
| Indirect materials | fill in the blank 11 | fill in the blank 12 | fill in the blank 13 | fill in the blank 14 |
| Total variable factory overhead cost | $fill in the blank 15 | $fill in the blank 16 | ||
| Fixed factory overhead costs: | ||||
| Supervisory salaries | $fill in the blank 17 | $fill in the blank 18 | ||
| Depreciation of plant and equipment | fill in the blank 19 | fill in the blank 20 | ||
| Insurance and property taxes | fill in the blank 21 | fill in the blank 22 | ||
| Total fixed factory overhead cost | $fill in the blank 23 | $fill in the blank 24 | ||
| Total factory overhead cost | $fill in the blank 25 | $fill in the blank 26 | ||
| Total controllable variances | $fill in the blank 27 | $fill in the blank 28 | ||
| Net controllable | ||||
| Net controllable variance-favorable | $fill in the blank 29 | |||
| Volume variance-unfavorable: | ||||
| Idle hours at the standard rate for fixed overhead | fill in the blank 30 | |||
| Total factory overhead cost variance-unfavorable | $fill in the blank 31 |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 5 images
