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.
|Indirect factory wages||$247,500|
|Power and light||189,000|
|Total variable cost||$489,000|
|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, $44,000.
Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 28,500 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If an amount box does not require an entry, leave it blank.
|Feeling Better Medical Inc.|
|Factory Overhead Cost Variance Report-Assembly Department|
|For the Month Ended October 31|
|Normal capacity for the month 30,000 hrs.|
|Actual production for the month 28,500 hrs.|
|Variable factory overhead costs:|
|Indirect factory wages||$||$||$||$|
|Power and light|
|Total variable cost||$||$|
|Fixed factory overhead costs:|
|Depreciation of plant and equipment|
|Insurance and property taxes|
|Total fixed cost||$||$|
|Total factory overhead cost||$||$|
|Total controllable variances||$||$|
|Idle hours at the standard rate for fixed factory overhead|
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
The total factory overhead cost variance is $10,550 and it is a unfavorable variance.
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