The Finishing Department of Paragon Manufacturing Co. prepared the following factory overhead cost budget for October of the current year, during which it expected to operate at a 100% capacity of 10,000 machine hours:
| Variable cost: | ||
| Indirect factory wages | $18,000 | |
| Power and light | 12,000 | |
| Indirect materials | 4,000 | |
| Total variable cost | $34,000 | |
| Fixed cost: | ||
| Supervisory salaries | $12,000 | |
| Depreciation of plant and | ||
| equipment | 8,800 | |
| Insurance and property taxes | 3,200 | |
| Total fixed cost | 24,000 | |
| Total factory overhead | $58,000 |
During October, the plant was operated for 9,000 machine hours and the factory overhead costs incurred were as follows: indirect factory wages, $16,400; power and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of plant and equipment, $8,800; insurance and property taxes, $3,200.
Prepare a factory overhead cost variance report for October. (The budgeted amounts for actual amount produced should be based on 9,000 machine hours.)
