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Aleonysh [2.5K]
3 years ago
9

Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Weld

ing Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,700 hours.
TIGER EQUIPMENT INC.
Factory Overhead Cost Budget—Welding Department
For the Month Ended May 31
1 Variable costs:
2 Indirect factory wages $40,020.00
3 Power and light 20,880.00
4 Indirect materials 17,400.00
5 Total variable cost $78,300.00
6 Fixed costs:
7 Supervisory salaries $19,800.00
8 Depreciation of plant and equipment 35,700.00
9 Insurance and property taxes 18,450.00
10 Total fixed cost 73,950.00
11 Total factory overhead cost $152,250.00
During May, the department operated at 9,080 standard hours, and the factory overhead costs incurred were indirect factory wages, $42,268; power and light, $22,064; indirect materials, $18,700; supervisory salaries, $19,800; depreciation of plant and equipment, $35,700; and insurance and property taxes, $18,450.
Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 9,080 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter favorable variances as negative amounts.
Factory Overhead Cost Variance Report
Shaded cells have feedback.
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. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter favorable variances as negative amounts.
Score: 106/174
TIGER EQUIPMENT INC.
Factory Overhead Cost Budget - Welding Department
For the Month Ended May 31
1 Productive capacity for the month 8,700 hours
2 Actual production for the month 9,080 hours
3
4 Budget (at Actual Production) Actual Variances: Favorable Variances: Unfavorable
5 Variable factory overhead costs:
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9 ✔ ✔
10 Fixed factory overhead costs:
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12 ✔ ✔
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Business
1 answer:
Gwar [14]3 years ago
4 0

Answer:

TIGER EQUIPMENT INC.

Factory Overhead Cost Budget—Welding Department

For the Month Ended May 31                        Budgets    

1 Variable costs:                                       Static     Flexible    Actual  Variance

2 Indirect factory wages                      $40,020  $41,768   $42,268  $500 U

3 Power and light                                   20,880    21,792     22,064    272 U

4 Indirect materials                                 17,400     18,160      18,700    540 U

5 Total variable cost                           $78,300    $81,720  $83,032 $1,312 U

6 Fixed costs:

7 Supervisory salaries                         $19,800  $19,800    $19,800    None

8 Depreciation of plant & equipment  35,700    35,700      35,700    None

9 Insurance and property taxes           18,450     18,450       18,450    None

10 Total fixed cost                                73,950 $73,950    $73,950    None

11 Total factory overhead cost          $152,25 $155,670  $156,982 $1,312 U

Explanation:

TIGER EQUIPMENT INC.

Factory Overhead Cost Budget—Welding Department

For the Month Ended May 31

1 Variable costs:                                       Static     Flexible    Actual  Variance

2 Indirect factory wages                      $40,020  $41,768   $42,268  $500 U

3 Power and light                                   20,880    21,792     22,064    272 U

4 Indirect materials                                 17,400     18,160      18,700    540 U

5 Total variable cost                           $78,300    $81,720  $83,032 $1,312 U

6 Fixed costs:

7 Supervisory salaries                         $19,800  $19,800    $19,800    None

8 Depreciation of plant & equipment  35,700    35,700      35,700    None

9 Insurance and property taxes           18,450     18,450       18,450    None

10 Total fixed cost                                73,950 $73,950    $73,950    None

11 Total factory overhead cost          $152,25 $155,670  $156,982 $1,312 U

Flexing the budget:

Indirect factory wages $40,020.00/8,700 * 9,080 = $41,768  

Power and light              20,880.00/8,700 * 9,080 = $ 21,792

Indirect materials            17,400.00 /8,700 * 9,080 = $18,160

Total variable cost       $78,300.00/8,700 * 9,080 = $81,720

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