Question

1)  

Flexible Overhead Budget

Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 18,000 hours of productive capacity in the department:

Variable overhead cost:
Indirect factory labor	$158,400
Power and light	6,120
Indirect materials	46,800
Total variable overhead cost		$211,320
Fixed overhead cost:
Supervisory salaries	$73,960
Depreciation of plant and equipment	46,490
Insurance and property taxes	29,580
Total fixed overhead cost		150,030
Total factory overhead cost		$361,350

Assuming that the estimated costs for November are the same as for October, prepare a flexible factory overhead cost budget for the Press Department for November for 16,000, 18,000, and 20,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.

Leno Manufacturing Company
Factory Overhead Cost Budget-Press Department
For the Month Ended November 30
Direct labor hours	16,000	18,000	20,000
Variable overhead cost:
Indirect factory labor	$	$	$
Power and light
Indirect materials
Total variable factory overhead	$	$	$
Fixed factory overhead cost:
Supervisory salaries	$	$	$
Depreciation of plant and equipment
Insurance and property taxes
Total fixed factory overhead	$	$	$
Total factory overhead cost	$	$	$

2)  

Factory Overhead Cost Variances

The following data relate to factory overhead cost for the production of 6,000 computers:

Actual:	Variable factory overhead	$254,600
	Fixed factory overhead	62,500
Standard:	6,000 hrs. at $50	300,000

If productive capacity of 100% was 10,000 hours and the total factory overhead cost budgeted at the level of 6,000 standard hours was $325,000, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $6.25 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Variance	Amount	Favorable/Unfavorable
Variable factory overhead controllable variance	$
Fixed factory overhead volume variance
Total factory overhead cost variance	$

Answer 1

(1)

Leno Manufacturing Company
Factory Overhead Cost Budget-Press Department
For the Month Ended November 30
Direct labor hours	16,000	18,000	20,000
Variable overhead cost:
Indirect factory labor	$140,800	$158,400	$176,000
Power and light	$5,440	$6,120	$6,800
Indirect materials	$41,600	$46,800	$52,000
Total variable factory overhead	$187,840	$211,320	$234,800
Fixed factory overhead cost:
Supervisory salaries	$73,960	$73,960	$73,960
Depreciation of plant and equipment	$46,490	$46,490	$46,490
Insurance and property taxes	$29,580	$29,580	$29,580
Total fixed factory overhead	$150,030	$150,030	$150,030
Total factory overhead cost	$337,870	$361,350	$384,830

(2)

Variance	Amount	Favorable / Unfavorable
Variable factory overhead controllable variance	$   7,900	Favorable
Fixed factory overhead volume variance	$ 25,000	Unfavorable
Total factory overhead cost variance	$ 17,100	Unfavorable

Explanations ;-

Variable factory overhead controllable variance
Actual Variable factory overhead	$    254,600
Less: Applied Variable factory overhead
(6000 hours * [$50 - $6.25])	$    262,500
	$         7,900	Favorable
Fixed factory overhead volume variance
Actual Fixed factory overhead	$      62,500
Less: Applied Fixed factory overhead
(6000 hours * $6.25)	$      37,500
	$      25,000	Unfavorable
Total factory overhead cost variance
Actual Total Factory Overhead ($254600 + $62500)	$    317,100
Less: Applied Total factory overhead	$    300,000
	$      17,100	Unfavorable