Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding DepartmeRE OF HY year. The company expected to operate the department at 100% of normal capacity of 8,200 hours. Variable costs: Indirect factory wages Power and light Indirect materials Total variable cost Fixed costs: $24,600 17,056 13,776 $14,150 36,290 11,060 Normal capacity for the month 8,200 hrs Actual production for the month 8,700 hrs. $55,432 Supervisory salaries Depreciation of plant and equipment Insurance and property taxes Total fixed cost Total factory overhead cost During May, the department operated at 8,700 standard hours. The factory overhead costs incurred were indirect factory wages, $26,360; power and light, $17,770. indirect materials, $14,900; supervisory salaries, $14,150; depreciation of plant and equipment, $36,290, and insurance and property taxes, $11,060. 61,500 $116,932 Required: Prepare a factory overhead cost variance report for May. To be useful for cost control, the budgeted amounts should be based on 8,700 hours. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Round your per unit computations to the nearest cent, if required. If an amount box does not require an entry, leave it blank. Tiger Equipment Inc. Factory Overhead Cost Variance Report-Welding Department For the Month Ended May 31 Actual Budget Unfavorable Variances Favorable Variances

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyz…