Question

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 8,700 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
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4 Budget (at Actual Production) Actual Variances: Favorable Variances: Unfavorable
5 Variable factory overhead costs:
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10 Fixed factory overhead costs:
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Answer 1

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

Step-by-step 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