Problem
Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, during which it expected to use 24,000 hours for production:
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TANNIN PRODUCTS INC.
Factory Overhead Cost Budget-Trim Department
For the Month Ended July 31
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1
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Variable overhead cost:
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2
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Indirect factory labor
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$57,600.00
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3
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Power and light
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14,400.00
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4
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Indirect materials
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24,000.00
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5
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Total variable overhead cost
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$96,000.00
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6
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Fixed overhead cost:
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7
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Supervisory salaries
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$55,000.00
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8
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Depreciation of plant and equipment
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39,200.00
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9
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Insurance and property taxes
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152,300.00
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10
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Total fixed overhead cost
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246,500.00
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11
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Total factory overhead cost
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$342,500.00
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Tannin has available 29,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 26,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows:
1 Actual variable factory overhead cost:
2 Indirect factory labor $61,580.00
3 Power and light 15,300.00
4 Indirect materials 28,300.00
5 Total variable cost $105,180.00
Construct a factory overhead cost variance report for the Trim Department for July. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter favorable variances as negative amounts.
Construct a factory overhead cost variance report for the Trim Department for July. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter favorable variances as negative amounts.