(Solution Document) Problem 22(7)-4A Name: Section: Score: 0% Key Code: [Key code here] Instructions

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, and 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, $15200.


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.

Please see attached spreadsheet. 


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