Answer:
Tiger Equipment Inc.
Welding Department
Factory Overhead Cost Variance Report for May
Variable costs: Estimates Flexible Actual Variance
Indirect factory wages $30,240 $34,117 $32,400 $1,717 F
Power and light 20,160 22,745 21,000 1,745 F
Indirect materials 16,800 18,954 18,250 704 F
Total variable cost $67,200 $75,816 $71,650 $4,166 F
Fixed costs:
Supervisory salaries $20,000 $20,000 $20,000 $ 0
Depreciation of plant & equipment 36,200 36,200 36,200 0
Insurance and property taxes 15,200 15,200 15,200 0
Total fixed cost 71,400 71,400 71,400 0
Total factory overhead cost $138,600 $147,216 $143,050 $4,166 F
Explanation:
a) Data and Calculations:
Variable costs: Estimates Flexible Actual Variance
Indirect factory wages $30,240 $34,117 $32,400 $1,717 F
Power and light 20,160 22,745 21,000 1,745 F
Indirect materials 16,800 18,954 18,250 704 F
Total variable cost $67,200 $75,816 $71,650 $4,166 F
Fixed costs:
Supervisory salaries $20,000 $20,000 $20,000 $ 0
Depreciation of plant & equipment 36,200 36,200 36,200 0
Insurance and property taxes 15,200 15,200 15,200 0
Total fixed cost 71,400 71,400 71,400 0
Total factory overhead cost $138,600 $147,216 $143,050 $4,166 F
Flexible costs:
Indirect factory wages = $30,240/7,800 * 8,800 = $34,117
Power and light = $20,160/7,800 * 8,800 = $22,745
Indirect materials = $16,800/7,800 * 8,800 = $18,954
Normal capacity = 7,800 hours (100%)
Actual capacity = 8,800 hours (113%)
