Question

TIGER EQUIPMENT INC.

Factory Overhead Cost Budget - Welding Department

For the Month Ended May 31

1	Variable costs:
2	Indirect factory wages	$42,000.00
3	Power and light	26,880.00
4	Indirect materials	16,800.00
5	Total variable cost		$85,680.00
6	Fixed costs:
7	Supervisory salaries	$20,400.00
8	Depreciation of plant and equipment	35,400.00
9	Insurance and property taxes	15,600.00
10	Total fixed cost		71,400.00
11	Total factory overhead cost		$157,080.00

During May, the department operated at 8,740 standard hours. The factory overhead costs incurred were indirect factory wages, $44,216; power and light, $27,696; indirect materials, $18,090; supervisory salaries, $20,400; depreciation of plant and equipment, $35,400; and insurance and property taxes, $15,600.

Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,740 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.

Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,740 hours 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.

TIGER EQUIPMENT INC.

Factory Overhead Cost Variance Report - Welding Department

For the Month Ended May 31

1	Normal capacity for the month		8,400 hours
2	Actual production for the month		8,740 hours
3
4		Actual	Budget	Variances: Unfavorable	Variances: Favorable
5	Variable costs:
6
7
8
9
10	Fixed costs:
11
12
13
14
15
16
17
18
19
20

Answer 1

TIGER EQUIPMENT INC
FACTORY OVERHEAD COST VARIANCE REPORT - WELDING DEPARTMENT
FOR THE MONTH ENDED 31 MAY
	ACTUAL	BUDGET	VARIANCES : UNFAVORABLE	VARIANCES: FAVORABLE
Variable Cost
Indirect factory wages	44216	43700	516
Power and light	27696	27968		272
Indirect materials	18090	17480	610
Total Variable Cost	90002	89148
Fixed Cost
Supervisory Salary	20400	20400	-	-
Depreciation on Plant and Machinery	35400	35400	-	-
Insurance & Property Taxes	15600	15600	-	-
Total Fixed Cost	71400	71400
Total Factory Overhead	161402	160548
Total Controllable Variances			1126	272
Net Controllable Variances			854
Budgeted Values were given for 8400 normal capacity for the month
But we have to calculate budgeted values for the actual capacity
1. Indirect Factory wages = (42000/8400)*8740 = 43700
2. Power and light = (26880/8400)*8740 = 27968
3. Indirect materials = (16800/8400)*8740 = 17480