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Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs. @ $6.00 per Ib.) $ 18.00 Direct labor

Antuan Company set the following standard costs for one unit of its product.

Direct materials (3.0 Ibs. @ $6.00 per Ib.) $ 18.00
Direct labor (1.7 hrs. @ $14.00 per hr.) 23.80
Overhead (1.7 hrs. @ $18.50 per hr.) 31.45
Total standard cost $ 73.25

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 24,000
DepreciationMachinery 71,000
Taxes and insurance 17,000
Supervision 224,750
Total fixed overhead costs 336,750
Total overhead costs $ 471,750

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

Direct materials (46,000 Ibs. @ $6.20 per lb.) $ 285,200
Direct labor (22,000 hrs. @ $14.40 per hr.) 316,800
Overhead costs
Indirect materials $ 41,950
Indirect labor 176,150
Power 17,250
Repairs and maintenance 34,500
DepreciationBuilding 24,000
DepreciationMachinery 95,850
Taxes and insurance 15,300
Supervision 224,750 629,750
Total costs $ 1,231,750

3. Compute the direct materials cost variance, including its price and quantity variances. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No variance.)

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