Question

Factory Overhead Cost Variance Report Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October of the current year. The company expected to operate the department at 100% of normal capacity of 7,100 hours. Variable costs: Indirect factory wages $22,720 Power and light 13,987 Indirect materials 11,147 Total variable cost $47,854 Fixed costs: Supervisory salaries Depreciation of plant and equipment $12,900 33,090 Insurance and property taxes 10,100 Total fixed cost 56,090 Total factory overhead cost $103,944 During October, the department operated at 7,500 standard hours, and the factory overhead costs incurred were indirect factory wages, $24,240; power and light, $14,510; indirect materials, $12,000; supervisory salaries, $12,900; depreciation of plant and equipment, $33,090; and insurance and property taxes, $10,100. Required: Prepare a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 7,500 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your per unit computations to the nearest cent, if required. If an amount box does not require an entry, leave it blank. Feeling Better Medical Inc. Factory Overhead Cost Variance Report-Assembly Department For the Month Ended October 31 Normal capacity for the month 7,100 hrs. Actual production for the month 7,500 hrs.

Answer 1

Feeling Better Medical Inc. Factory Overhead Cost Variance report-Assembly Department For the month ended December 31
	Actual	Budget ( at actual production )	Variances
			Unfavourable	Favourable
Variable FOH Costs
Indirect Factory Wages	24240	24000	240
Power and light	14510	14775		-265
Indirect Materials	12000	11775	225
Total Variable Factory Overhead costs	50750	50550
Fixed FOH Costs
Supervisory Salaries	12900	12900
Depreciation of plant and equipment	33090	33090
Insurance and property taxes	10100	10100
Total Fixed factory Overhead costs	56090	56090
Total Factory ovehead costs a+b	106840	106640
Total Controllable Variances			465	-265
Net Controllable variances - favourable				200
Volume variance - Unfavourable
Excess hours used over normal at the standard rate for fixed FOH 56090-(56090*7500/7100)				3160
Total FOC - Variance - Unfavourable				3360

Budgeted Variable foh costs	(Variable OH cost of indirect factory Labor/ Budgeted Volume hours)* Actual Hours of production	22720/7100*7500
Budgeted Variable foh costs	(Variable OH cost of power and light/ Budgeted Volume hours)* Actual Hours of production	13987/7100*7500
Budgeted Variable foh costs	(Variable OH cost of Indirect materials/ Budgeted Volume hours)* Actual Hours of production	11147/7100*7500