Factory Overhead Cost Variance Report Tannin Products Inc. prepared the followin
ID: 2560099 • Letter: F
Question
Factory Overhead Cost Variance Report
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 16,000 hours for production:
Tannin has available 20,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 15,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows:
Construct a factory overhead cost variance report for the Trim Department for July. Enter all amounts as positive numbers. If an amount box does not require an entry, leave it blank. Round your interim computations to the nearest cent, if required.
Variable overhead costs: Indirect factory labor $54,400 Power and light 12,160 Indirect materials 19,200 Total variable overhead cost $ 85,760 Fixed overhead costs: Supervisory salaries $59,280 Depreciation of plant and equipment 15,600 Insurance and property taxes 29,120 Total fixed overhead cost 104,000 Total factory overhead cost $189,760Explanation / Answer
Amounts in $ Tannin Products Inc factory ovehead cost variance report - Trim Department For the Month Ended July 31 productive capacity for the month 20,000 Hrs Actual production capacity used for the month 15000 hrs variance Budget at Actual production Actual favorable Unvarable Variable factory overhead costs: Indirect factory labor 51000 49730 1270 Power and light 11400 11190 210 Indirect materials 18000 18900 900 Total variable factory overhead cost 80400 79820 Fixed factory overhead costs: Supervisory salaries 59280 59280 Depreciation of plant and equipment 15600 15600 Insurance and property taxes 29120 29120 Total fixed factory overhead cost 104000 104000 Total factory overhead cost 184400 183820 Total controllable variances 1480 900 Net controllable variance-favorable (1480-900) 580 Volume variance-unfavorable Idle hours at the standard rate for fixed factory overhead 6500 6500 Total factory overhead cost variance-unfavorable (6500-580) 5920 Budgeted variable costs at 15000 hrs Indirect factory labour =54400*15000/16000 =$51000 power & Light =12160*15000/16000 =$11400 Indirect materials =$19200*15000/16000 =$18000 Standard rate Fixed factory over head = Fixed factory overhead / Standard Hours =$104000/16000 =$6.5 Per hour idle hours at Standard rate =(16000-15000) *$6.5 =$6500
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