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Question - The Finishing Department of Paragon Manufacturing Co. prepared the following factory overhead cost budget for October of the current year, during which it expected to operate at a 100% capacity of 10,000 machine hours:
Variable cost:
Indirect factory wages
$18,000
Power and light
12,000
Indirect materials
4,000
Total variable cost
$34,000
Fixed cost:
Supervisory salaries
$12,000
Depreciation of plant and
equipment
8,800
Insurance and property taxes
3,200
Total fixed cost
24,000
Total factory overhead
$58,000
During October, the plant was operated for 9,000 machine hours and the factory overhead costs incurred were as follows: indirect factory wages, $16,400; power and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of plant and equipment, $8,800; insurance and property taxes, $3,200.
Prepare a factory overhead cost variance report for October.
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