Question - The Finishing Department of Paragon Manufacturing Co. prepared the following factory overhead cost budget for October of the current year, during which it expected to operate at a 100% capacity of 10,000 machine hours:
|
Variable cost:
|
|
|
|
Indirect factory wages
|
$18,000
|
|
|
Power and light
|
12,000
|
|
|
Indirect materials
|
4,000
|
|
|
Total variable cost
|
|
$34,000
|
|
Fixed cost:
|
|
|
|
Supervisory salaries
|
$12,000
|
|
|
Depreciation of plant and
|
|
|
|
equipment
|
8,800
|
|
|
Insurance and property taxes
|
3,200
|
|
|
Total fixed cost
|
|
24,000
|
|
Total factory overhead
|
|
$58,000
|
During October, the plant was operated for 9,000 machine hours and the factory overhead costs incurred were as follows: indirect factory wages, $16,400; power and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of plant and equipment, $8,800; insurance and property taxes, $3,200.
Prepare a factory overhead cost variance report for October.