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Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0 Ibs. @ $5.00 per Ib.) $ 20.00 Direct labor

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

Direct materials (4.0 Ibs. @ $5.00 per Ib.) $ 20.00
Direct labor (1.7 hrs. @ $12.00 per hr.) 20.40
Overhead (1.7 hrs. @ $18.50 per hr.) 31.45
Total standard cost $ 71.85

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 71,000
Taxes and insurance 18,000
Supervision 224,750
Total fixed overhead costs 336,750
Total overhead costs $ 471,750

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

Direct materials (61,500 Ibs. @ $5.10 per lb.) $ 313,650
Direct labor (21,000 hrs. @ $12.30 per hr.) 258,300
Overhead costs
Indirect materials $ 41,700
Indirect labor 176,850
Power 17,250
Repairs and maintenance 34,500
DepreciationBuilding 23,000
DepreciationMachinery 95,850
Taxes and insurance 16,200
Supervision 224,750 630,100
Total costs $

1,202,050

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. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price

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