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 30,000 hours.Variable costs:  Indirect factory wages$247,500 Power and light189,000 Indirect materials52,500     Total variable cost $489,000Fixed costs:  Supervisory salaries$126,000 Depreciation of plant and equipment70,000 Insurance and property taxes44,000     Total fixed cost 240,000Total factory overhead cost $729,000During October, the department operated at 28,500 hours, and the factory overhead costs incurred were indirect factory wages, $234,000; power and light, $178,500; indirect materials, $50,600; supervisory salaries, $126,000; depreciation of plant and equipment, $70,000; and insurance and property taxes, $44,000.Required:Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 28,500 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If an amount box does not require an entry, leave it blank.Feeling Better Medical Inc.Factory Overhead Cost Variance Report-Assembly DepartmentFor the Month Ended October 31Normal capacity for the month 30,000 hrs.    Actual production for the month 28,500 hrs.     ActualCostBudget(at ActualProduction)UnfavorableVariancesFavorableVariancesVariable factory overhead costs:    Indirect factory wages$$$$Power and light    Indirect materials    Total variable cost$$  Fixed factory overhead costs:    Supervisory salaries$$  Depreciation of plant and equipment    Insurance and property taxes    Total fixed cost$$  Total factory overhead cost$$  Total controllable variances  $$   $ Volume variance—unfavorable:    Idle hours at the standard rate for fixed factory overhead       $

Question
Asked Nov 18, 2019
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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 30,000 hours.

Variable costs:    
Indirect factory wages $247,500  
Power and light 189,000  
Indirect materials 52,500  
    Total variable cost   $489,000
Fixed costs:    
Supervisory salaries $126,000  
Depreciation of plant and equipment 70,000  
Insurance and property taxes 44,000  
    Total fixed cost   240,000
Total factory overhead cost   $729,000

During October, the department operated at 28,500 hours, and the factory overhead costs incurred were indirect factory wages, $234,000; power and light, $178,500; indirect materials, $50,600; supervisory salaries, $126,000; depreciation of plant and equipment, $70,000; and insurance and property taxes, $44,000.

Required:

Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 28,500 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If an amount box does not require an entry, leave it blank.

Feeling Better Medical Inc.
Factory Overhead Cost Variance Report-Assembly Department
For the Month Ended October 31
Normal capacity for the month 30,000 hrs.        
Actual production for the month 28,500 hrs.        
 
Actual
Cost
Budget
(at Actual
Production)

Unfavorable
Variances

Favorable
Variances
Variable factory overhead costs:        
Indirect factory wages $ $ $ $
Power and light        
Indirect materials        
Total variable cost $ $    
Fixed factory overhead costs:        
Supervisory salaries $ $    
Depreciation of plant and equipment        
Insurance and property taxes        
Total fixed cost $ $    
Total factory overhead cost $ $    
Total controllable variances     $ $
      $  
Volume variance—unfavorable:        
Idle hours at the standard rate for fixed factory overhead        
      $  
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Expert Answer

Step 1

Factory overhead cost variance: The difference between the variable factory overhead controllable variances and the fixed factory overhead volume variances is known as factory overhead cost variance

Step 2

The total factory overhead cost variance is $10,550 and it is a unfavorable variance.

A factory overhead cost variance report for the Assembly Department is as follows:
Incorporation F
Factory overhead cost variance report- Assembly Department
for the month ended October 31
30,000 hours
28,500 hours
Productive capacity for the month
Actual productive capacity used for the month
Budget (at
actual
production) Unfavorable Favorable
Variances
Actual
Variable factory overhead costs:
Indirect factory wages
Power and light
Indirect materials
Total variable factory overhead cost (a) S
Fixed factory overhead costs:
Supervisory salaries
Depreciation of plant and equipment
Insurance and property taxes
$ (1,125)
S (1,050)
234,000 235,125
178,500 179,550 (21
49,875 (3) $
50,600
725
463,100 S 464,550
126,000 126,000
70,000 $ 70,000
44.000 44.000
Total fixed factory overhead cost (b)
Total factory overhead cost (a)+(b)
Total controllable variances
240,000 S 240,000
703,100 704.550
725 S (2,175)
Net controllable variance-unfavorable
Volume variance-unfavorable:
Excess hours used over normal at the
standard rate for fixed
factory overhead (4)
$ (1,450)|
S 12,000
Total factory overhead cost
variance-unfavorable
$10,550
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A factory overhead cost variance report for the Assembly Department is as follows: Incorporation F Factory overhead cost variance report- Assembly Department for the month ended October 31 30,000 hours 28,500 hours Productive capacity for the month Actual productive capacity used for the month Budget (at actual production) Unfavorable Favorable Variances Actual Variable factory overhead costs: Indirect factory wages Power and light Indirect materials Total variable factory overhead cost (a) S Fixed factory overhead costs: Supervisory salaries Depreciation of plant and equipment Insurance and property taxes $ (1,125) S (1,050) 234,000 235,125 178,500 179,550 (21 49,875 (3) $ 50,600 725 463,100 S 464,550 126,000 126,000 70,000 $ 70,000 44.000 44.000 Total fixed factory overhead cost (b) Total factory overhead cost (a)+(b) Total controllable variances 240,000 S 240,000 703,100 704.550 725 S (2,175) Net controllable variance-unfavorable Volume variance-unfavorable: Excess hours used over normal at the standard rate for fixed factory overhead (4) $ (1,450)| S 12,000 Total factory overhead cost variance-unfavorable $10,550

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Step 3

Working notes:

...
Determine the budgeted variable factory overhead costs:
[Varnable overhead co st of
indirect factory labor
Budgeted volume hours
Budgeted variable
xA ctual hours of production
factory overhead co sts
$247,500
- x28,500
30,000 hrs
-$235,125
[Variable overhead cost
Budgeted variable
of power and light
xA ctual hours ofproduction
factory overhead costs)
Budgeted volume hours
$189,000
-x28,500
30,000 hrs
$179,550
Variable overhead cost
Budgeted variable
factory overhead costs
of indirect materials
XA ctual hours of production
Budgeted volume hours
$52,500
-x28,500
30,000 hrs
-$49,875
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Image Transcriptionclose

Determine the budgeted variable factory overhead costs: [Varnable overhead co st of indirect factory labor Budgeted volume hours Budgeted variable xA ctual hours of production factory overhead co sts $247,500 - x28,500 30,000 hrs -$235,125 [Variable overhead cost Budgeted variable of power and light xA ctual hours ofproduction factory overhead costs) Budgeted volume hours $189,000 -x28,500 30,000 hrs $179,550 Variable overhead cost Budgeted variable factory overhead costs of indirect materials XA ctual hours of production Budgeted volume hours $52,500 -x28,500 30,000 hrs -$49,875

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