Question

Factory Overhead Cost Variance Report

Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October of the current year. The company expected to operate the department at 100% of normal capacity of 7,200 hours.

Variable costs:
Indirect factory wages	$23,040
Power and light	13,104
Indirect materials	10,944
Total variable cost		$47,088
Fixed costs:
Supervisory salaries	$14,900
Depreciation of plant and equipment	38,230
Insurance and property taxes	11,670
Total fixed cost		64,800
Total factory overhead cost		$111,888

During October, the department operated at 7,600 standard hours, and the factory overhead costs incurred were indirect factory wages, $24,560; power and light, $13,580; indirect materials, $11,800; supervisory salaries, $14,900; depreciation of plant and equipment, $38,230; and insurance and property taxes, $11,670.

Required:

Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 7,600 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. If an amount box does not require an entry, leave it blank.

Feeling Better Medical Inc.
Factory Overhead Cost Variance Report—Assembly Department
For the Month Ended October 31
Normal capacity for the month 7,200 hrs.
Actual production for the month 7,600 hrs.
	Budget	Actual	Favorable Variances	Unfavorable Variances
Variable costs:
Indirect factory wages	$	$		$
Power and light			$
Indirect materials
Total variable cost	$	$
Fixed costs:
Supervisory salaries	$	$
Depreciation of plant and equipment
Insurance and property taxes
Total fixed cost	$	$
Total factory overhead cost	$	$
Total controllable variances			$	$
				$
Excess hours used over normal at the standard rate for fixed factory overhead
				$

Answer 1

Feeling Better Medical Inc.
Factory Overhead Cost Variance Report—Assembly Department
For the Month Ended October 31
Normal capacity for the month	7,200 hrs.
Actual production for the month	7,600 hrs.
	Budget	Actual	Favorable Variances	Unfavorable Variances
Variable costs:
Indirect factory wages	24320	24560		240
Power and light	13832	13580	(252)
Indirect materials	11552	11800		248
Total variable cost	49704	49940
Fixed costs:
Supervisory salaries	14900	14900
Depreciation of plant and equipment	38230	38230
Insurance and property taxes	11670	11670
Total fixed cost	64800	64800
Total factory overhead cost	114504	114740
Total controllable variances			(252)	488
Net controllable variance—unfavorable				236
Excess hours used over normal at the standard rate for fixed factory overhead	400 hrs.
Volume variance—favorable (7200-7600)*(64800/7200)				(3600)

23040/7200*7600 =23267

13104/7200*7600=12865

10944/7200*7600 =11179