Financial and Managerial Accounting: PR(22)7-4A Bio-Care, Inc.
Financial and Managerial Accounting
PR(22)7-4A 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.