Question
Antuan Company set the following standard costs for one unit of its product. Direct materials (5.0 Ibs. @ $5.00 per Ib.)$25.00Direct labor (1.9 hrs. @
Antuan Company set the following standard costs for one unit of its product.
Direct materials (5.0 Ibs. @ $5.00 per Ib.)$25.00Direct labor (1.9 hrs. @ $10.00 per hr.)19.00Overhead (1.9 hrs. @ $18.50 per hr.)35.15Total standard cost$79.15
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 (75% Capacity)Variable overhead costsIndirect materials$15,000Indirect labor75,000Power15,000
Repairs and maintenance30,000Total variable overhead costs$135,000Fixed overhead costsDepreciation?Building23,000Depreciation?Machinery70,000Taxes and insurance16,000Supervision283,250Total fixed overhead costs392,250Total 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.)$385,050Direct labor (20,000 hrs. @ $10.20 per hr.)204,000Overhead costsIndirect materials$41,550Indirect labor176,250Power17,250Repairs and maintenance34,500Depreciation?Building23,000Depreciation?Machinery94,500Taxes and insurance14,400Supervision283,250684,700Total costs$1,273,750
rev: 03_28_2018_QC_CS-122864
Problem 21-3A Part 1&2
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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