Factory overhead cost variance report Tiger Equipment Inc., a manufacturer of co
ID: 2466628 • Letter: F
Question
Factory overhead cost variance report Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,700 hours. TIGER EQUIPMENT INC. Factory Overhead Cost Budget—Welding Department For the Month Ended May 31 1 Variable costs: 2 Indirect factory wages $44,370.00 3 Power and light 21,750.00 4 Indirect materials 17,400.00 5 Total variable cost $83,520.00 6 Fixed costs: 7 Supervisory salaries $19,200.00 8 Depreciation of plant and equipment 35,200.00 9 Insurance and property taxes 19,550.00 10 Total fixed cost 73,950.00 11 Total factory overhead cost $157,470.00 During May, the department operated at 9,120 standard hours, and the factory overhead costs incurred were indirect factory wages, $47,092; power and light, $23,100; indirect materials, $18,850; supervisory salaries, $19,200; depreciation of plant and equipment, $35,200; and insurance and property taxes, $19,550. Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 9,120 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter favorable variances as negative amounts.
Explanation / Answer
The company decided to operate the welding department at for the month ending May31 with 100% of normal capacity 8,700hrs
Overhead Cost variance report operating at 9120hours against the normal 8700 hrs
Total Overhead Variance=Actual factory Overhead-Standard Factory Overhead
(162992-157470=5522)
Based on the details of the output provided further and detailed analysis can be provided
S.No Description Amount 9120(hrs) 8700(hrs) Variable costs 1 Indirect factory wages 44,370.00 2 Power and Light 21,750.00 3 Indirect Materials 17,400.00 4 Total Variable Cost 83,520.00 Fixed Costs 1 Supervisory salaries 19,200.00 2 Depreciation of Plant and Equipment 35,200.00 3 Insurance and Property Taxes 19,550.00 Total Fixed Costs 73,950.00 Factory Overhead costs (9,120hrs) 1 Indirect Factory Wages 47,092.00 2 Power and Light 23,100.00 3 Indirect Materials 18,850.00 4 Supervisory Salaries 19,200.00 5 Depreciation of Plant and equipment 35,200.00 6 Insurance and property taxes 19,550.00 Total Factory Overhead Costs 157,470.00Related Questions
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