The Finishing Department of Paragon Manufacturing Co. prepared the following fac

Question

The Finishing Department of Paragon Manufacturing Co. prepared the following factory overhead cost budget for October of the current year, during which it expected to operate at a 100% capacity of 10,000 machine hours: Variable cost: Indirect factory wages $18,000 Power and light 12,000 Indirect materials 4,000 Total variable cost $34,000 Fixed cost: Supervisory salaries $12,000 Depreciation of plant and equipment 8,800 Insurance and property taxes 3,200 Total fixed cost 24,000 Total factory overhead $58,000 During October, the plant was operated for 9,000 machine hours and the factory overhead costs incurred were as follows: indirect factory wages, $16,400; power and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of plant and equipment, $8,800; insurance and property taxes, $3,200. Prepare a factory overhead cost variance report for October. (The budgeted amounts for actual amount produced should be based on 9,000 machine hours.)

Explanation / Answer

flexible factory overhead cost budget Particulars 8000 hrs 10000 hrs 12000 hrs 9000hrs ============================================================================= Variable Overheads: Indirect Labour $22,400 $28,000 $33,600 $25,200 Power and light $3,600 $4,500 $5,400 $4,050 Indirect materials $17,600 $22,000 $26,400 $19,800 ============================================================================== Total variable cost $43,600 $54,500 $65,400 $49,050 ============================================================================== Fixed Over head Supervisor salaries $36,000 $36,000 $36,000 $36,000 Depreciation $30,000 $30,000 $30,000 $30,000 Insurance & taxes $8,000 $8,000 $8,000 $8,000 ================================================================================= Total fixed cost $74,000 $74,000 $74,000 $74,000 ================================================================================= Total Costs $1,17,600 $1,28,500 $1,39,400 $1,23,050 ===================================================================================

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.