14-

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		70,000
Taxes and insurance		18,000
Supervision		281,250
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 (60,500 Ibs. @ $6.20 per lb.)				$	375,100
Direct labor (22,000 hrs. @ $13.30 per hr.)					292,600
Overhead costs
Indirect materials	$	41,350
Indirect labor		176,300
Power		17,250
Repairs and maintenance		34,500
DepreciationBuilding		23,000
DepreciationMachinery		94,500
Taxes and insurance		16,200
Supervision		281,250			684,350
Total costs				$	1,352,050

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.

ANTUAN COMPANY
Flexible Overhead Budgets
For Month Ended October 31
	Flexible Budget		Flexible Budget for
	Variable Amount per Unit	Total Fixed Cost	65% of capacity	75% of capacity	85% of capacity
Sales (in units)
Variable overhead costs
	$0.00		0	0	0
Fixed overhead costs
		0	0	0	0
Total overhead costs