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: | |
| Supervisory 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.
Required:
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.
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