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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.
During May, the department operated at 8,860 hours, and the factory overhead costs incurred were indirect factory wages, $32,400; power and light, $21,000; indirect materials, $18,250; supervisory salaries, $20,000;
Variable costs: | ||
Indirect factory wages | $30,240 | |
Power and light | 20,160 | |
Indirect materials | 16,800 | |
Total variable cost | $ 67,200 | |
Fixed costs: | ||
Supervisory salaries | $20,000 | |
Depreciation of plant and equipment | 36,200 | |
Insurance and property taxes | 15,200 | |
Total fixed cost | 71,400 | |
Total factory overhead cost | $138,600 |
Instructions
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.
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Chapter 22 Solutions
Financial & Managerial Accounting 14th Ed. W/ PAC LMS Intg CNOWv2 2S
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