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

Direct materials (4.0 Ibs. @ $4.00 per Ib.)	$	16.00
Direct labor (2.0 hrs. @ $12.00 per hr.)		24.00
Overhead (2.0 hrs. @ $18.50 per hr.)		37.00
Total standard cost	$	77.00

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 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		25,000
DepreciationMachinery		70,000
Taxes and insurance		17,000
Supervision		308,000
Total fixed overhead costs					420,000
Total 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. @ $4.10 per lb.)				$	252,150
Direct labor (22,000 hrs. @ $12.10 per hr.)					266,200
Overhead costs
Indirect materials	$	41,950
Indirect labor		176,700
Power		17,250
Repairs and maintenance		34,500
DepreciationBuilding		25,000
DepreciationMachinery		94,500
Taxes and insurance		15,300
Supervision		308,000			713,200
Total costs				$	1,231,550
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.

ANTUAN COMPANY
Flexible Overhead Budgets
For Month Ended October 31
	Flexible Budget		Flexible Budget for
	Variable Amount per Unit	Total Fixed Cost	65% of capacity	75% of capacity	85% of capacity
Sales (in units)			13,000	15,000	17,000
Variable overhead costs
Indirect materials	$1.00		13,000	15,000	17,000
Indirect labor	5.00		65,000	75,000	85,000
Power	1.00		13,000	15,000	17,000
	2.00		26,000	30,000	34,000
Total variable costs	$9.00		117,000	135,000	153,000
Fixed overhead costs
DepreciationBuilding		$25,000	25,000	25,000	25,000
DepreciationMachinery		70,000	70,000	70,000	70,000
Taxes and insurance		17,000	17,000	17,000	17,000
Supervision		308,000	308,000	308,000	308,000
		420,000	420,000	420,000	420,000
Total overhead costs			$37,000	$555,000	$573,000

Actual Cost			0				0	Standard Cost
AQ	x							SQ	x
	x	0							x
			$0	0			$0
				$0

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

3. Compute the direct materials cost variance, including its price and quantity variances. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price x