Bio-Care, Inc., a manufacturer of disposable medical supplies, prepared the following factory… 1 answer below »

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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