Antaean Company set the following standard costs for one unit of its product. Direct materials 4lbs. @6 dollars per lb. $24 Direct labor 1.9 hours @ $11 per hour $20.90 Overhead 1.9 hours @$18.50 per hour $35.15 Total standard cost $80.05 The predetermined overhead rate (18.50 per direct labor hour) is based on an expected volume of 75% of the factorys capacity of 20000 units per month. Following are companys budgeted overhead costs per month at the 75% level.

Overhead budget (75% capacity) Variable overhead costs Indirect materials--------------$15000 Indirect labor--------------------75,000 Power---------------------------15000 Repairs and maintenance----30,000 Total variable overhead costs===$135,000

Fixed overhead costs Depreciation-building--------25000 Depreciation-machinery------72000 Taxes and insurance-----------18000 Supervision----------------------277,250 Total fixed overhead costs ===392,250

Total overhead costs=================$527250

The company incurred the following actual costs when it operated at 75% of capacity in October Direct materials (61,500lbs @$6.20 per lb)---------------$381300 Direct labor (28,000 hrs. @$11.30 per hour) -------------316,400 Overhead costs Indirect materials------------$42,000 Indirect labor-----------176,750 Power------------------17,250 Repairs and maintence----34,500 Dep-building--------25,000 Dep-machinery------97,200 Taxes and insurance----16200 Supervision------277,250--------686,150 Total costs-------------------------------$1,383,850

Required 1) Examine the monthly overhead budget to (A) determine the costs per unit for each variable overhead item and its total per unit costs, and (B) identify the total fixed costs per month. 2) Prepare flexible overhead budgets for October showing the amount of each variable and fixed cost at the 65% , 75%, and 85% capacity levels.(fill in the chart***):

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)	1)	14)	27)	40)	53)
Indirect labor	2)	15)	28)	41)	54)
Indirect materials	3)	16)	29)	42)	55)
Repairs and maintenance	4)	17)	30)	43)	56)
Power	5)	18)	31)	44)	57)
Total variable costs	6)	19)	32)	45)	58)
Fixed costs	7)	20)	33)	46)	59)
Depreciation- Building	8)	21)	34)	47)	60)
Depreciation- Machinery	9)	22)	35)	48)	61)
Supervision	10)	23)	36)	49)	62)
Taxes and insurnace	11)	24)	37)	50)	63)
Total fixed costs	12)	25)	38)	51)	64)
Total overhead costs	13)	26)	39)	52)	65)

3) Compute the direct materials cost variance, including its price and quantity variances (fill out the chart***);

Actual Cost								Standard Cost
AQ	X	AP		AQ	X	SP		SQ	X	SP
1)	X	2)		3)		4)		5)		6)

4) Compute the direct labor cost variance, including its rate and efficiency variances (fill in chart**):

Actual Cost								Standard Cost
AH	X	AR		AH	X	SR		SH	X	SR
1)	X	2)		3)		4)		5)		6)

5) Prepare a detailed overhead variance report that shows the variances for individual items of overhead (fill in chart***):

Antuan Company
Overhead Variance Report
	Flexible Budget	Actual Budget	Variance	Favorable or Unfavoriable?
Variable Costs
Indirect labor	1)	13)	25)	37)
Indirect materials	2)	14)	26)	38)
Power	3)	15)	27)	39)
Repairs and Maintenance	4)	16)	28)	40)
Total variable costs	5)	17)	29)	41)
Fixed costs	6)	18)	30)	42)
Depreciation- Building	7)	19)	31)	43)
Depreciation- Machinery	8)	20)	32)	44)
Supervision	9)	21)	33)	45)
Taxes and insurance	10)	22)	34)	46)
Total fixed costs	11)	23)	35)	47)
Total overhead costs	12)	24)	36)	48)

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