Standard factory overhead variance report
Bio-Care, Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for March 2010. The company expected to operate the department at 100% of normal capacity of 18,000 hours.
| Variable Cost | |
| Indirect factory wages | 135,000 |
| Power and lights | 93,600 |
| Indirect materials | 25,200 |
| Total variable cost | 253,800 |
| Fixed cost | |
| Supervisory salaries | 72,000 |
| Depreciation of plant & equip | 51,500 |
| Insurance & property tax | 24,100 |
| Total fixed cost | 147,600 |
| Total factory overhead cost | 401,400 |
During March, the department operated at 16,900 hours, and the factory overhead costs incurred were indirect factory wages, $126,320; power and light, $88,110; indirect materials, $23,220; supervisory salaries, $72,000; depreciation of plant and equipment, $51,500; and insurance and property taxes, $24,100.
Instructions:
Prepare a factory overhead cost variance report for March. To be useful for cost control, the budgeted amounts should be based on 16,900 hours.
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