Question

Factory Overhead Cost Variance Report

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 5,400 hours.

Variable costs:
Indirect factory wages	$17,280
Power and light	9,720
Indirect materials	8,100
Total variable cost		$35,100
Fixed costs:
Supervisory salaries	$10,180
Depreciation of plant and equipment	26,130
Insurance and property taxes	7,970
Total fixed cost		44,280
Total factory overhead cost		$79,380

During October, the department operated at 5,700 standard hours, and the factory overhead costs incurred were indirect factory wages, $18,420; power and light, $10,080; indirect materials, $8,700; supervisory salaries, $10,180; depreciation of plant and equipment, $26,130; and insurance and property taxes, $7,970.

Required:

Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 5,700 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your per unit computations to the nearest cent, if required. 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 5,400 hrs.
Actual production for the month 5,700 hrs.
	Budget	Actual	Favorable Variances	Unfavorable Variances
Variable costs:
Indirect factory wages	$	$		$
Power and light			$
Indirect materials
Total variable cost	$	$
Fixed costs:
Supervisory salaries	$	$
Depreciation of plant and equipment
Insurance and property taxes
Total fixed cost	$	$
Total factory overhead cost	$	$
Total controllable variances			$	$
				$
Excess hours used over normal at the standard rate for fixed factory overhead

Answer 1

Particular	Budgted	Actual	Favaurable	Unfavourable
	5700	5700
Variable costs:
Indirect factory wages (17280/5400*5700)	$18,240.00	$18,420.00		$180.00
Power & light (9720/5400*5700)	$10,260.00	$10,080.00	$180.00
Indirect materials (8100/5400*5700)	$8,550.00	$8,700.00		$150.00
Total Variable cost	$37,050.00	$37,200.00	$180.00	$330.00
Fixed Costs:
supervisory salaries	$10,180.00	$10,180.00
Depreciation of Plant & Equipment	$26,130.00	$26,130.00
Insura and property taxes	$7,970.00	$7,970.00
Total fixed costs	$44,280.00	$44,280.00
Total factory overhead cost	$81,330.00	$81,480.00
Total controllable			$180.00	$330.00
Total uncontrollable				$150.00