Tiger Equipment inc,. a manufacturer of construction equipment, prepared the fol
ID: 2369033 • Letter: T
Question
Tiger Equipment inc,. a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May 2012. The company expected to operate the department at 100% of normal capacity of 7,000 hours. Variable Costs: Indirect factory wages $22,050 Power and light 12,600 Indirect Materials 10,500 Total Variable Cost $45,150 Fixed Costs: Supervistory salaries $12,000 Depreciation of plant and equipment 31,450 Insurance and property taxes 9,750 Total fixed costs $53,200 Total factory overhead $98,350 During May, the department operated at 7,400 standard hours, and the factory overhead costs incurred were indirect factory wages, $23,580; power and light, $13,120; indirect materials, $11,310; supervisory salaries, $12,000; depreciation of plant and equipment, $31,450; and insurance and property taxes, $9,750. Instructions Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 7,400 hours.Explanation / Answer
so if the company worked for 7000 hours then .. the profit the the company got is total factory over head cost -Total Variable Cost=98350+45150=143500... but let us take the coma=pny worked for 7400 hours then the company profit is total factory over head cost -Total Variable Cost=91130+45150=136280....there fore manufacturing over hear balance is $7720