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.InstructionsPrepare a factory overhead cost variance report for December. To be useful for cost control, the budgeted amounts should be based on 6,000hours.

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Variable costs: Indirect factory wages Power and light $17,640 10,080 8,400 Indirect materials Total variable cost $36,120 Fixed costs: Supervisory salaries Depreciation of plant and equipment Insurance and property taxes Total fixed cost $12,000 31,450 9,750 53,200 $89,320 Total factory overhead cost