Factory Overhead Cost Variance Report Feeling Better Medical Inc., a manufacture
ID: 2795184 • Letter: F
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 8,900 hours.
During October, the department operated at 9,400 standard hours, and the factory overhead costs incurred were indirect factory wages, $27,530; power and light, $18,830; indirect materials, $16,700; supervisory salaries, $18,220; depreciation of plant and equipment, $46,730; and insurance and property taxes, $14,260.
Required:
Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 9,400 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.
Variable costs: Indirect factory wages $25,810 Power and light 18,156 Indirect materials 15,486 Total variable cost $59,452 Fixed costs: Supervisory salaries $18,220 Depreciation of plant and equipment 46,730 Insurance and property taxes 14,260 Total fixed cost 79,210 Total factory overhead cost $138,662Explanation / Answer
Ans. Cost variance report (all figure in $)
Budget on 9400 hrs Actual Favourable Unfavourable
Variable Cost:
Indirect Factory Wages 27260 27530 - (270)
Power and light 19176 18830 346 -
Indirect materials 16356 16700 - (344)
Total variable cost 62792 63060 - (268)
Fixed cost
Supervisory salary 18220 18220 - -
Dep. on plant and equipment 46730 46730 - -
Insurance and property tax 14260 14260 - -
Total fixed cost 79210 79210 - -
Total Factory overhead 142002 142270 - (268)
Total controllable variance (diff. between variable cost) - (268) Net controllable variance unfavorable (268)
Volume variance favourable (268)
Excess hours used over normal at the 79210/8900 = 8.90
Std. rate for fixed factory overhead
Total factory overhead cost variance-favourable (268)
Feeling Better Medical Inc. Factory Overhead Cost Variance Report—Assembly Department For the Month Ended October 31Related Questions
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