Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0 Ibs. @ $5.00 per Ib.) Direct labor (1.6 hrs. @ $11.00 per hr.) Overhead (1.6 hrs. @ $18.50 per hr.) Total standard cost $20.00 17.60 29.60 $67.20 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 (759 Capacity) Variable overhead costs Indirect materials $ 15,000 Indirect labor 75,000 Power 15,000 Repairs and maintenance 30,000 Total variable overhead costs Fixed overhead costs Depreciation-Building 25,000 Depreciation-Machinery 71,000 Taxes and insurance 18,000 Supervision 195,000 Total fixed overhead costs Total overhead costs $135,000 309,000 $444,000 The company incurred the following actual costs when it operated at 75% of capacity in October The company incurred the following actual costs when it operated at 75% of capacity in October $ 308,550 237,300 Direct materials (60,500 lbs. @ $5.10 per lb.) Direct labor (21,000 hrs. @ $11.30 per hr.) Overhead costs Indirect materials Indirect labor Power Repairs and maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervision Total costs $ 41,850 176,200 17,250 34,500 25,000 95,850 16,200 195,000 601,850 $1,147,700 Problem 08-3A Part 1&2 Required: 182. 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 Total Fixed 65% of 75% of 85% of Cost capacity capacity capacity 13,000 15,000 17,000 per Unit 1.00 Sales (in units) Variable overhead costs Indirect materials Indirect labor Power Repairs and maintenance 5.00 1.00 2.00 13,000 65,000 13,000 26,000 15,000 75,000 15,000 30,000 17,000 85,000 17,000 34,000 $ 9.00 117,000 135,000 153,000 $ Total variable costs Fixed overhead costs Depreciation-Building Depreciation-Machinery Taxes and insurance Supervision 25,000 95,850 16,200 195,000 Total fixed costs 0 0 0 0 Total overhead costs 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.) Actual Cost Stand
