Reference no: EM132687188
Problem - Standard factory overhead variance report - Star Medical, Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October 2012. The company expected to operate the department at 100% of normal capacity of 24,000 hours.
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Variable costs:
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Indirect factory wages
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$180,000
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Power and light
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124,800
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Indirect materials
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33,600
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Total variable cost
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$338,400
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Fixed costs:
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Supervisory salaries
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$ 72,000
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Depreciation of plant and equipment
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51,500
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Insurance and property taxes
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24,100
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Total fixed cost
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147,600
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Total factory overhead cost
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$486,000
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During October, the department operated at 22,500 hours, and the factory overhead costs incurred were indirect factory wages, $167,550; power and light, $116,800; indirect materials, $31,950; supervisory salaries, $72,000; depreciation of plant and equipment,$51,500; and insurance and property taxes, $24,100.
Instructions - Make a factory overhead cost variance report for October. To be useful for cost control, the budgeted amounts should be based on 22,500 hours.