KAT Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for December 2010. The company expected to operate the department at 100% of normal capacity of 5,600 hours. Variable costs:
During December, the department operated at 6,000 standard hours, and the factory overhead costs incurred were indirect factory wages, $18,760; power and light, $10,620; indirect materials, $9,450; supervisory salaries, $12,000; depreciation of plant and equipment, $31,450; and insurance and property taxes, $9,750.
Prepare a factory overhead cost variance report for December. To be useful for cost control, the budgeted amounts should be based on 6,000hours.
This question was answered on: Jul 11, 2017
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