Johnny Lee Incorporated produces a line of small gasoline-powered engines for various residential machines, including lawnmowers, snowblowers, and garden tools like tillers and weed-whackers. As the company's cost accountant, you've been tasked with creating a flexible budget for factory overhead costs, which appear to be increasing faster than revenues. Currently, the company allocates both variable and fixed factory overhead costs to products based on machine hours (MHs).
Within the relevant output range, the monthly factory overhead costs are projected as follows: engineering support $16,700, insurance on the manufacturing facility $6,700, property taxes on the manufacturing facility $13,700, depreciation on manufacturing equipment $15,500, and indirect labor costs of supervisory salaries $16,100, setup labor $4,100, and materials handling $4,200. Variable factory overhead costs are budgeted at $21.00 per MH, including electricity $7.00, indirect materials for Material A $2.00 and for Material B $4.00, indirect labor-maintenance $6.00, and production-related supplies $2.00.
In December, the standard allowed machine hours for output produced was 7,200, with a denominator activity level of 7,700 machine hours per month. Actual fixed overhead costs for December were as follows: engineering support $20,600 (salaries), factory insurance $10,600, property taxes $13,700, equipment depreciation $15,500, supervisory salaries $16,100, setup labor $7,300, and materials handling labor $7,500. The actual variable overhead cost per machine hour worked in December was consistent with the standard cost except for electricity $7.50 per machine hour and manufacturing supplies $2.10 per machine hour. The company utilized 7,300 machine hours in December.
The company analyzes the total factory overhead cost variance, the total flexible-budget variance, and the production volume variance each month. Determine the total factory overhead cost variance.
