   Chapter 13, Problem 13.7P

Chapter
Section
Textbook Problem

Standard factory overhead variance report Seabury. Inc.. a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October. The company expected to operate the department at 100% of normal capacity of 25.000 hours.During October, the department operated at 23,500 hours, and the factory overhead costs incurred were as follows: indirect factory wages, $140,500; power and light.$28,600; indirect materials, $15,220; supervisor)' salaries,$125,000; depreciation of plant and equipment, $49,000; and insurance and property taxes,$29,750. InstructionsPrepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be- based on 23.500 hours.

To determine

Concept Introduction:

The variable factory overhead controlled variance is difference between the budgeted and actual variable factory overhead.

The fixed factory overhead volume variance is the difference between the standard fixed factory overhead at actual production and at 100% of normal capacity.

The sum of variable overhead controlled variance and fixed factory overhead volume variance is the factory overhead cost variance.

To Prepare:

The factory overhead cost variance report.

Explanation
 Seabury Inc For the month of October Productive capacity for the month of ( 100% normal) 25,000hours Actual production for the month 23,500hours Particulars Budgeted (at actual production) Actual Variance Favorable Unfavorable Variable factory overhead cost: Indirect factory labor (W.N. 1) $141,000$140,500 $500 Power and light ((W.N. 2)$27,730 $28,600$870 Indirect Material ((W.N. 3) $15,980$15,220 $760 Total variable factory overhead cost$184,710 $184,320 Fixed factory overhead costs: Supervisory salaries$125,000 $125,000 Depreciation$49,000 \$49,000 Insurance and prop

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