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Antuan Company set the following standard costs for one unit of its product. Direct materials (5.0 lbs. @ $5.00 per lb.) $25.00 Direct labor 1.8

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

Direct materials (5.0 lbs. @ $5.00 per lb.) $25.00
Direct labor 1.8 hrs @ $14.00 per hr.) 25.20
Overhead (1.8 hrs. @ $18.50 per hr.) 33.30
Total Standard Cost $83.50

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 $255,500
Total fixed overhead costs $364,500
Total Overhead costs $499,500

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

Direct materials (76,000 Ibs. @ $5.10 per lb.) $387,600
Direct labor (22,000 hrs. @ $14.40 per hr.) $316,800
Overhead costs $41,150
Indirect materials $176,700
Indirect labor $17,250
Power $34,500
Repairs and maintenance $23,000
DepreciationBuilding $94,500
DepreciationMachinery $14,400
Taxes and insurance $255,500
Supervision $255,500
Total costs $1,361,400

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 Oct 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)
Variable overhead costs
Indirect materials
Indirect labor
Power
Repairs and maintenance
Total variable costs
Fixed overheac costs
Depreciation -- Building
Depreciation -- Machinery
Taxes and insurance
Supervision
Total fixed costs
Total overhead costs

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

Actual Cost Standard Cost
Actual quantity x Actual Price Actual quantity x Standard Price Standard Quantity x Standard Price

? x ?

Total=

? x ?

Total=

? x ?

Total=

Difference= Difference =
Direct materials price variance ? Favorable or Unfavorable
Direct materials quantity variance ? Favorable or Unfavorable
Total direct materials variance ? Favorable or Unfavorable

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

Actual Cost Standard Cost
Actual hours x Actual rate Actual hours x Standard rate Standard hours x Standard rate

? x ?

Total=

? x ?

Total=

? x ?

Total=

Difference= Difference =
Direct labor rate variance ? Favorable or Unfavorable
Direct labor efficiency variance ? Favorable or Unfavorable
Total direct labor variance ? Favorable or Unfavorable

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

ANTUAN COMPANY
Overhead Variance Report
For Month Ended Oct 31
Expected production volume 75%
Production level achieved 75%
Volume variance No Variance
Flexible Budget Actual Results Variances Fav./Unfav.
Variable Costs
Indirect materials
Indirect labor
Power
Repairs and maintenance
Total Variable costs
Fixed Costs
Depreciation -- Building
Depreciation -- Machinery
Taxes and insurance
Supervision
Total fixed costs
Total overhead costs

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