Power Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for July 2008. The company expected to operate the department at 100% of normal capacity of 4,800 hours.

During July, the department operated at 5,000 standard hours, and the factory overhead costs incurred were indirect factory wages, $14,000; power and light, $9,250; indirect materials, $8,450; supervisory salaries, $16,000; depreciation of plant and equipment, $43,500; and insurance and property taxes, $6,740.

Instructions
Prepare a factory overhead cost variance report for July. To be useful for cost control, the budgeted amounts should be based on 5,000hours.

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Variable costs: Indirect factory wages Power and light Indirect materials $14,160 7,680 8,880 Total variable cost $30,720 Fixed costs: Supervisory salaries Depreciation of plant and equipment Insurance and property taxes $16,000 43,500 6,740 Total fixed cost 66,240 96,960 Total factory overhead cost