Tannin Products Inc. prepared the following factory overhead cost budget for the Trim Department for July of the current year, during which it expected to use 12,000 hours for production: Variable overhead cost: Indirect factory labor $31,200 Power and light 9,120 Indirect materials 20,400 Total variable overhead cost $ 60,720 Fixed overhead cost: Supervisory salaries $45,600
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Tannin Products Inc. prepared the following
| Variable overhead cost: | ||
| Indirect factory labor | $31,200 | |
| Power and light | 9,120 | |
| Indirect materials | 20,400 | |
| Total variable overhead cost | $ 60,720 | |
| Fixed overhead cost: | ||
| Supervisory salaries | $45,600 | |
| Depreciation of plant and equipment | 12,000 | |
| Insurance and property taxes | 22,400 | |
| Total fixed overhead cost | 80,000 | |
| Total factory overhead cost | $140,720 |
Tannin has available 16,000 hours of monthly productive capacity in the Trim Department under normal business conditions. During July, the Trim Department actually used 11,000 hours for production. The actual fixed costs were as budgeted. The actual variable overhead for July was as follows:
| Actual variable factory overhead cost: | |
| Indirect factory labor | $27,890 |
| Power and light | 8,210 |
| Indirect materials | 19,600 |
| Total variable cost | $55,700 |
Construct a factory overhead cost variance report for the Trim Department for July. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If an amount box does not require an entry, leave it blank. Round your interim computations to the nearest cent, if required.
| Tannin Products Inc. | ||||
| Factory Overhead Cost Variance Report-Trim Department | ||||
| For the Month Ended July 31 | ||||
| Productive capacity for the month 16,000 hrs. | ||||
| Actual productive capacity used for the month 11,000 hrs. | ||||
| Actual | Budget (at actual production) | Unfavorable Variances | Favorable Variances | |
| Variable factory overhead costs: | ||||
| Indirect factory labor | $fill in the blank 1 | $fill in the blank 2 | $fill in the blank 3 | $fill in the blank 4 |
| Power and light | fill in the blank 5 | fill in the blank 6 | fill in the blank 7 | fill in the blank 8 |
| Indirect materials | fill in the blank 9 | fill in the blank 10 | fill in the blank 11 | fill in the blank 12 |
| Total variable factory overhead cost | $fill in the blank 13 | $fill in the blank 14 | ||
| Fixed factory overhead costs: | ||||
| Supervisory salaries | $fill in the blank 15 | $fill in the blank 16 | ||
| Depreciation of plant and equipment | fill in the blank 17 | fill in the blank 18 | ||
| Insurance and property taxes | fill in the blank 19 | fill in the blank 20 | ||
| Total fixed factory overhead cost | $fill in the blank 21 | $fill in the blank 22 | ||
| Total factory overhead cost | $fill in the blank 23 | $fill in the blank 24 | ||
| Total controllable variances | $fill in the blank 25 | $fill in the blank 26 | ||
| $fill in the blank 28 | ||||
| Idle hours at the standard rate for fixed factory overhead | fill in the blank 30 | |||
| $fill in the blank 32 |
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