Factory overhead cost variance reportTiger Equipment Inc., a manufacturer of construction equipment, prepared thefollowing factory overhead cost budget for the Welding Department for May of thecurrent year. The company expected to operate the department at 100% of normalcapacity of 8,400 hours.Variable costs:Indirect factory wages $30,240Power and light 20,160Indirect materials 16,800Total variable cost $ 67,200Fixed costs:Supervisory salaries $20,000Depreciation of plant and equipment 36,200Insurance and property taxes 15,200Total fixed cost 71,400Total factory overhead cost $138,600During May, the department operated at 8,860 standard hours. The factory overheadCosts incurred were indirect factory wages, $32,400; power and light, $21,000; indirectmaterials, $18,250; supervisory salaries, $20,000; depreciation of plant andequipment, $36,200; and insurance and property taxes, $15,200.Instructions Prepare a factory overhead cost variance report for May. To be useful for cost control,the budgeted amounts should be based on 8,860 hours

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter9: Evaluating Variances From Standard Costs
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Factory overhead cost variance report
Tiger Equipment Inc., a manufacturer of construction equipment, prepared the
following factory overhead cost budget for the Welding Department for May of the
current year. The company expected to operate the department at 100% of normal
capacity of 8,400 hours.
Variable costs:
Indirect factory wages $30,240
Power and light 20,160
Indirect materials 16,800
Total variable cost $ 67,200
Fixed costs:
Supervisory salaries $20,000
Depreciation of plant and equipment 36,200
Insurance and property taxes 15,200
Total fixed cost 71,400
Total factory overhead cost $138,600
During May, the department operated at 8,860 standard hours. The factory overhead
Costs incurred were indirect factory wages, $32,400; power and light, $21,000; indirect
materials, $18,250; supervisory salaries, $20,000; depreciation of plant and
equipment, $36,200; and insurance and property taxes, $15,200.
Instructions

Prepare a factory overhead cost variance report for May. To be useful for cost control,
the budgeted amounts should be based on 8,860 hours

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