Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,400 hours. TIGER EQUIPMENT INC. Factory Overhead Cost Budget-Welding Department For the Month Ended May 31 1 Variable costs: 2 Indirect factory wages $30,240.00 3 Power and light 20,160.00 4 Indirect materials 16,800.00 5 Total variable cost $67,200.00 6 Fixed costs: 7 Supervisory salaries $20,000.00 8 Depreciation of plant and equipment 36,200.00 9 Insurance and property taxes 15,200.00 10 Total fixed cost 71,400.00 11 Total factory overhead cost $138,600.00 During May, the department operated at 8,860 standard hours. The factory overhead costs incurred were indirect factory wages, $32,400; power and light, $21,000; indirect materials, $18,250; supervisory salaries, $20,000; depreciation of plant and equipment, $36,200; and insurance and property taxes, $15,200. Required: Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,860 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter all variances as positive amounts.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 7EB: A company estimates its manufacturing overhead will be $840,000 for the next year. What is the...

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Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,400 hours.

TIGER EQUIPMENT INC.

Factory Overhead Cost Budget-Welding Department

For the Month Ended May 31

1	Variable costs:
2	Indirect factory wages	$30,240.00
3	Power and light	20,160.00
4	Indirect materials	16,800.00
5	Total variable cost		$67,200.00
6	Fixed costs:
7	Supervisory salaries	$20,000.00
8	Depreciation of plant and equipment	36,200.00
9	Insurance and property taxes	15,200.00
10	Total fixed cost		71,400.00
11	Total factory overhead cost		$138,600.00

During May, the department operated at 8,860 standard hours. The factory overhead costs incurred were indirect factory wages, $32,400; power and light, $21,000; indirect materials, $18,250; supervisory salaries, $20,000; depreciation of plant and equipment, $36,200; and insurance and property taxes, $15,200.

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Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,860 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter all variances as positive amounts.

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