Tiger Equipment Inc., a manufacturer of construction equipment, prepared the fol
ID: 2528645 • Letter: T
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
$44,370.00
3
Power and light
21,750.00
4
Indirect materials
17,400.00
5
Total variable cost
$83,520.00
6
Fixed costs:
7
Supervisory salaries
$19,200.00
8
Depreciation of plant and equipment
35,200.00
9
Insurance and property taxes
19,550.00
10
Total fixed cost
73,950.00
11
Total factory overhead cost
$157,470.00
During May, the department operated at 9,120 standard hours, and the factory overhead costs incurred were indirect factory wages, $47,092; power and light, $22,500; indirect materials, $18,850; supervisory salaries, $19,200; depreciation of plant and equipment, $35,200; and insurance and property taxes, $19,550.
Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 9,120 hours. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter all variances as positive amounts. What is the volume variance-favorable and what is the Total factory overhead cost variance-favorable?
TIGER EQUIPMENT INC.
Factory Overhead Cost Budget—Welding Department
For the Month Ended May 31
Explanation / Answer
Volume variance = $4032 U
Total factory overhead cost variance = $4032 U + $890 U = $4922 U
TIGER EQUIPMENT INC. Factory Overhead Cost Variance Report For the Month Ended May 31 Budget Volume Variance Flexible Budget Spending Variance Actuals Hours 8700 9120 9120 Variable costs: Indirect factory wages 44370 2142 U 46512 580 U 47092 Power and light 21750 1050 U 22800 300 F 22500 Indirect materials 17400 840 U 18240 610 U 18850 Total variable cost 83520 4032 U 87552 890 U 88442 Fixed costs: Supervisory salaries 19200 0 None 19200 0 None 19200 Depreciation of plant and equipment 35200 0 None 35200 0 None 35200 Insurance and property taxes 19550 0 None 19550 0 None 19550 Total fixed cost 73950 0 None 73950 0 None 73950 Total factory overhead cost 157470 4032 U 161502 890 U 162392Related Questions
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