Question
Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs. @ $5.00 per Ib.)$15.00Direct labor (1.7 hrs. @
Antuan Company set the following standard costs for one unit of its product.
Direct materials (3.0 Ibs. @ $5.00 per Ib.)$15.00Direct labor (1.7 hrs. @ $13.00 per hr.)22.10Overhead (1.7 hrs. @ $18.50 per hr.)31.45Total standard cost$68.55
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 costsDepreciationBuilding24,000DepreciationMachinery70,000Taxes and insurance18,000Supervision224,750Total fixed overhead costs336,750Total overhead costs$471,750
The company incurred the following actual costs when it operated at 75% of capacity in October.
Direct materials (46,500 Ibs. @ $5.20 per lb.)$241,800Direct labor (20,000 hrs. @ $13.20 per hr.)264,000Overhead costsIndirect materials$41,200Indirect labor176,800Power17,250Repairs and maintenance34,500DepreciationBuilding24,000DepreciationMachinery94,500Taxes and insurance16,200Supervision224,750629,200Total costs$1,135,000
rev: 04_27_2020_QC_CS-209738
Problem 08-3A 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.
3.Compute the direct materials cost variance, including its price and quantity variances.
4.Compute the direct labor cost variance, including its rate and efficiency variances
5.Prepare a detailed overhead variance report that shows the variances for individual items of overhead.
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