1. James Corp. applies overhead on the basis of direct labor hours. For the month of May, the company planned production of 8,000 units (80% of its production capacity of 10,000 units) and prepared the following overhead budget: Operating Levels Overhead Budget 80% Production in units 8,000 Standard direct labor hours 32,000 Budgeted overhead Variable overhead costs Indirect materials $ 22,400 Indirect labor 32,000 Power 6,400 Maintenance 3,200 Total variable costs 64,000 Fixed overhead costs Rent of factory building 16,000 DepreciationMachinery 11,300 Supervisory salaries 30,300 Total fixed costs 57,600 Total overhead costs $ 121,600 During May, the company operated at 90% capacity (9,000 units) and incurred the following actual overhead costs: Overhead Costs Indirect materials $ 22,400 Indirect labor 35,850 Power 7,200 Maintenance 4,405 Rent of factory building 16,000 DepreciationMachinery 11,300 Supervisory salaries 33,100 Total actual overhead costs $ 130,255 1. Compute the overhead controllable variance. 2. Compute the overhead volume variance. 3. Prepare an overhead variance report at the actual activity level of 9,000 units.

2.

[The following information applies to the questions displayed below.] Antuan Company set the following standard costs for one unit of its product.

Direct materials (4.0 Ibs. @ $6.00 per Ib.)	$	24.00
Direct labor (1.9 hrs. @ $13.00 per hr.)		24.70
Overhead (1.9 hrs. @ $18.50 per hr.)		35.15
Total standard cost	$	83.85

The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factorys capacity of 20,000 units per month. Following are the companys budgeted overhead costs per month at the 75% capacity level.

Overhead Budget (75% Capacity)
Variable overhead costs
Indirect materials	$	15,000
Indirect labor		75,000
Power		15,000
Repairs and maintenance		30,000
Total variable overhead costs				$	135,000
Fixed overhead costs
DepreciationBuilding		23,000
DepreciationMachinery		72,000
Taxes and insurance		17,000
Supervision		280,250
Total fixed overhead costs					392,250
Total overhead costs				$	527,250

The company incurred the following actual costs when it operated at 75% of capacity in October.

Direct materials (61,000 Ibs. @ $6.10 per lb.)				$	372,100
Direct labor (23,000 hrs. @ $13.20 per hr.)					303,600
Overhead costs
Indirect materials	$	41,900
Indirect labor		176,600
Power		17,250
Repairs and maintenance		34,500
DepreciationBuilding		23,000
DepreciationMachinery		97,200
Taxes and insurance		15,300
Supervision		280,250			686,000
Total costs				$	1,361,700

rev: 03_28_2018_QC_CS-122864

Problem 8-3A Part 1&2

Required: 1&2. Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed.

3. Compute the direct materials cost variance, including its price and quantity variances. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price

4. Compute the direct labor cost variance, including its rate and efficiency variances. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate

5. Prepare a detailed overhead variance report that shows the variances for individual items of overhead.