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vagabundo [1.1K]
3 years ago
9

Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, d

uring which it expected to use 20,000 hours for production: Variable overhead cost: Indirect factory labor $46,000 Power and light 12,000 Indirect materials 20,000 Total variable overhead cost $78,000 Fixed overhead cost: Supervisory salaries $54,500 Depreciation of plant and equipment 40,000 Insurance and property taxes 35,500 Total fixed overhead cost 130,000 Total factory overhead cost $208,000 Tannin has available 25,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 22,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows: Actual variable factory overhead cost: Indirect factory labor $49,700 Power and light 13,000 Indirect materials 24,000 Total variable cost $86,700 Construct a factory overhead cost variance report for the Trim Department for July. 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. Round your interim computations to the nearest cent, if required.
Business
2 answers:
amid [387]3 years ago
7 0

Answer:

factory overhead cost varaince

                                       Budget           Actual             Variance

Variable cost :

Indirect factory cost         $46,000     $49700            3,700 Unfav.

Power and light                  12,000       13,000              1,000 unfav.

Indirect materials               20,000      24,000             4,000 unfav

fixed cost:

supervisory salary              54500       54,500          

Dep of plant and equipment 40,000  40,000

Insurance and property tax   <u> 35,500</u>   <u>35,500</u>

total                                          <u>208,000</u>  <u>216,700</u>            <u>8,700 un</u>fav

Explanation:

Dmitry_Shevchenko [17]3 years ago
3 0

Answer: Total Factory Overhead cost variance unfavourable $16,500

Explanation:

Tannin product inc

Factory Overhead cost variance report -Trim Department for the month ended July

Productive capacity for the month 25,000 hrs

Actual productive capacity used for the month 22,000 hrs

Budget. Actual. Variance.

Favourable unfavourable

Variable factory overhead cost

Indirect factory labour. 50,600. 49,700. ($900)

Power and light. 13,200. 13,000. ($200)

Indirect materials. 22,000. 24,000. 2,000

--------------- -----------------

Total factory overhead cost. 85,800. 86,700

------------------ ---------------

Fixed factory overhead cost

Supervisory salaries. 54,500. 54,500

Depreciation of plant & Equipment. 40,000. 40,000

Insurance & property taxes. 35,500. 35,500

----------------- ----------------

Total Fixed factory overhead cost. 130,000. 130,000

----------------- -----------------

Total Factory Overhead cost. 215,800. 216,700

Total controllable variance. ($1,100) 2,000

Net controllable variance unfavourable. $900

Unfavourable volume variance at idle

Hours at the standard rate for fixed factory

Overhead. 15,600

--------------

Total Factory Overhead cost variance unfavourable. 16,500

-------------

Workings

To calculate budgeted variable factory overhead cost

Indirect factory labour =46,000 / 20,000 hrs × 22,000 hrs

= $50,600

Power and light= 12,000/ 20,000 hrs × 22,000 hrs

=$13,200

Indirect materials = 20,000 / 20,000 × 22,000 hrs

= $22,000

To calculate fixed factory overhead rate

= $130,000/ 25,000hrs

= $5.20 per hour

To calculate favourable variance

50,600 - 49,700= ($900)

13,200 - 13,000 =($200)

To calculate Total controllable variance

(900 + 200) = ($1,100)

To calculate Net controllable variance unfavourable

2000 - 1,100 = 900

To calculate volume variance unfavourable

(25,000hrs - 22,000hrs ) × $5.20

= $15,600

To calculate Total Factory Overhead cost variance unfavourable

900 + 15,600

= $16,500

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