Question
Antuan Company set the following standard costs for one unit of its product. Direct materials (5.0 Ibs. @ $5.00 per Ib.) $ 25.00 Direct labor
Antuan Company set the following standard costs for one unit of its product.
Direct materials (5.0 Ibs. @ $5.00 per Ib.) | $ | 25.00 |
Direct labor (1.9 hrs. @ $10.00 per hr.) | 19.00 | |
Overhead (1.9 hrs. @ $18.50 per hr.) | 35.15 | |
Total standard cost | $ | 79.15 |
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 | 16,000 | ||||
Supervision | 283,250 | ||||
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 (75,500 Ibs. @ $5.10 per lb.) | $ | 385,050 | |||
Direct labor (20,000 hrs. @ $10.20 per hr.) | 204,000 | ||||
Overhead costs | |||||
Indirect materials | $ | 41,550 | |||
Indirect labor | 176,250 | ||||
Power | 17,250 | ||||
Repairs and maintenance | 34,500 | ||||
DepreciationBuilding | 23,000 | ||||
DepreciationMachinery | 94,500 | ||||
Taxes and insurance | 14,400 | ||||
Supervision | 283,250 | 684,700 | |||
Total costs | $ | 1,273,750 | |||
rev: 03_28_2018_QC_CS-122864
Problem 21-3A Part 3
3. Compute the direct materials cost variance, including its price and quantity variances.
X Answer is complete but not entirely correct. Actual Cost Standard Cost AQ LX API AQ VLX SP SQ X 75,500 x 15,000 x 10.10 SP 500.00 5.00 7,550 2,500 75.000 5,050 72,500 Direct materials price variance Direct materials quantity variance $ 5,050 72,500 Unfavorable Unfavorable Unfavorable Total direct materials variance 10 050Step by Step Solution
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