Prepare a factory overhead cost variance report

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Reference no: EM13824054

Standard factory overhead variance report

Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May 2012. The company expected to operate the department at 100% of normal capacity of 7,000 hours.

Variable costs:

Indirect factory wages $22,050

Power and light 12,600

Indirect materials   10,500

Total variable cost $45,150

Fixed costs:

Supervisory salaries $12,000

Depreciation of plant and equipment 31,450

Insurance and property taxes   9,750

Total fixed cost 53,200

Total factory overhead cost $98,350

During May, the department operated at 7,400 standard hours, and the factory overhead costs incurred were indirect factory wages, $23,580; power and light, $13,120; indirect materials, $11,310; supervisory salaries, $12,000; depreciation of plant and equipment, $31,450; and insurance and property taxes, $9,750.

Instructions

Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 7,400 hours.

Reference no: EM13824054

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