Question

Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, during which it expected to use 19,000 hours for production:

1	Variable overhead cost:
2	Indirect factory labor	$39,900.00
3	Power and light	9,500.00
4	Indirect materials	19,000.00
5	Total variable overhead cost		$68,400.00
6	Fixed overhead cost:
7	Supervisory salaries	$54,800.00
8	Depreciation of plant and equipment	39,800.00
9	Insurance and property taxes	121,400.00
10	Total fixed overhead cost		216,000.00
11	Total factory overhead cost		$284,400.00

Tannin has available 24,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 21,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows:

1	Actual variable factory overhead cost:
2	Indirect factory labor	$43,290.00
3	Power and light	10,280.00
4	Indirect materials	23,200.00
5	Total variable cost	$76,770.00

Required:

Construct a factory overhead cost variance report for the Trim Department for July. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Factory Overhead Cost Variance Report

Shaded cells have feedback.

Construct a factory overhead cost variance report for the Trim Department for July. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Score: 102/174

Tannin Products Inc.

Factory Overhead Cost Variance Report—Trim Department

For the Month Ended July 31

1	Productive capacity for the month		24,000 hours
2	Actual productive capacity used for the month		21,000 hours
3
4		Budget (at actual production)	Actual	Variances: Favorable	Variances: Unfavorable
5	Variable factory overhead costs:
6	✔Indirect factory labor		✔43290
7	✔Power and light		✔10280
8	✔Indirect materials		✔23200
9	✔Total variable factory overhead cost		✔76770
10	Fixed factory overhead costs:
11	✔Supervisory salaries		✔54800
12	✔Depreciation of plant and equipment		✔39800
13	✔Insurance and property taxes		✔121400
14	✔Total fixed factory overhead cost		✔216000
15	✔Total factory overhead cost
16	✔Total controllable variances
17
18	✔Net controllable variance-unfavorable
19	✔Volume variance-unfavorable
20	✔Total factory overhead cost variance-unfavorable

Answer 1

Tannin Products Inc.
Factory Overhead Cost Variance Report—Trim Department
	Budget (at Actual production)	Actual	Variance	Remark
Hours	21000	21000
Variable Overhead Costs
Indirect Factory Labour	44100	43290	810	Favourabble
Power and Light	10500	10280	220	Favourabble
Indirect Material	21000	23200	-2200	Unfavourable
Total Variable Overhead Costs	75600	76770	-1170	Unfavourable
Fixed Overhead Cost
Supervisor Salaries	54800	54800	$0	No Effect
Depreciation of Plant & Equipment	39800	39800	$0	No Effect
Insurance and Property Tax	121400	121400	$0	No Effect
Total Fixed Overhead Cost	216000	216000	$0	No Effect
Total overhead Cost	$291,600	$292,770	-$1,170	Unfavourable

Workign Note for Budget at Actual

Indirect Factory Labour =(39900/19000)X21000 =$44100

Power and Light =(9500/19000)X21000=10500

Indirect material =(19000/19000)X21000=21000