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

Direct materials (4.0 Ibs. @ $5.00 per Ib.)$20.00Direct labor (2.0 hrs. @ $12.00 per hr.)24.00Overhead (2.0 hrs. @ $18.50 per hr.)37.00Total standard cost$81.00

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 costsIndirect materials$15,000Indirect labor75,000Power15,000Repairs and maintenance30,000Total variable overhead costs$135,000Fixed overhead costsDepreciationbuilding25,000Depreciationmachinery71,000Taxes and insurance17,000Supervision307,000Total fixed overhead costs420,000Total overhead costs$555,000

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

Direct materials (61,500 Ibs. @ $5.20 per lb.)$319,800Direct labor (29,000 hrs. @ $12.20 per hr.)353,800Overhead costsIndirect materials$41,400Indirect labor176,350Power17,250Repairs and maintenance34,500Depreciationbuilding25,000Depreciationmachinery95,850Taxes and insurance15,300Supervision307,000712,650Total costs$1,386,250

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Required:1&2.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.

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3.Compute the direct materials cost variance, including its price and quantity variances.

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4.Compute the direct labor cost variance, including its rate and efficiency variances.

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5.Prepare a detailed overhead variance report that shows the variances for individual items of overhead.