3. Compute the direct materials cost varlance, Including Its price and quantity varlances. Actual Cost Standard Cost Actual quantity Actual Actual quantity Standard Standard quantity Standard price Direct naterials 4.0 Ibs. $4.00 per Ib. Direct labor 1.7 hr. 12.00 per hr. Overhead 1.7 hrs. @ $18.50 per hr.) Total standard cost $16.00 20.40 1.45 $67.85 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level Overhead Budget 75% Capacity) Variable overhead costs Indirect labor Power Repirs and maintenance Total variable overhead costs 15,000 15,000 15,000 30,000 $135,000 Fixed overhead costs 24,000 71,000 18, 000 223,750 Taxes and insurance Total fixed overhead costs -336,750 Total overhead cost 471,750 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct naterials (61, 000 Ibs. $4.20 per lb. Direct labor (23,000 hrs. $12.40 per hr. Overhead costs $ 256, 200 285, 200 Indirect naterials Indirect labor Power Repirs and maintenance 41, 200 176,100 17, 250 34, 500 24,000 95, 850 16, 200 223, 750 Taxes and insurance 628, B5 Total costs $1,170, 250