Factory Overhead Cost Variance Report
Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May 2014. The company expected to operate the department at 100% of normal capacity of 8,200 hours.
| Variable costs: |
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| Â Â Â Indirect factory wages |
$25,420 |
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| Â Â Â Power and light |
19,434 |
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| Â Â Â Indirect materials |
16,154 |
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| Â Â Â Â Total variable cost |
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$61,008 |
| Fixed costs: |
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| Â Â Â Supervisory salaries |
$15,840 |
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| Â Â Â Depreciation of plant and equipment |
40,640 |
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| Â Â Â Insurance and property taxes |
12,400 |
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| Â Â Â Â Total fixed cost |
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68,880 |
| Total factory overhead cost |
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$129,888 |
During May, the department operated at 8,700 standard hours, and the factory overhead costs incurred were indirect factory wages, $27,240; power and light, $20,250; indirect materials, $17,500; supervisory salaries, $15,840; depreciation of plant and equipment, $40,640; and insurance and property taxes, $12,400.
Required:
Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,700 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your per unit computations to the nearest cent, if required.
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Factory Overhead Cost Variance Report-Welding Department
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For the Month Ended May 31, 2014
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Normal capacity for the month 8,200 hrs.
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Actual production for the month 8,700 hrs.
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Depreciation of plant and equipment
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Insurance and property taxes
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Total factory overhead cost
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Total controllable variances
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Net controllable variance-favorable
Net controllable variance-unfavorable
Correct 48
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Volume variance-favorable:
Volume variance-unfavorable:
Correct 50
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Excess hours used over normal at the standard rate for fixed factory overhead
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Total factory overhead cost variance-favorable
Total factory overhead cost variance-unfavorable
Correct 53
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Answers
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