Question
Antuan Company set the following standard costs per unit for its product. Direct materials (4.0 pounds @ $5.00 per pound) $ 20.00 Direct labor (1.7
Antuan Company set the following standard costs per unit for its product.
Direct materials (4.0 pounds @ $5.00 per pound) | $ 20.00 |
---|---|
Direct labor (1.7 hours @ $14.00 per hour) | 23.80 |
Overhead (1.7 hours @ $18.50 per hour) | 31.45 |
Standard cost per unit | $ 75.25 |
The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level 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 |
Maintenance | 30,000 |
Total variable overhead costs | 135,000 |
Fixed overhead costs | |
DepreciationBuilding | 23,000 |
DepreciationMachinery | 71,000 |
Taxes and insurance | 17,000 |
Supervisory salaries | 225,750 |
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 pounds @ $5.10 per pound) | $ 313,650 | |
---|---|---|
Direct labor (23,000 hours @ $14.30 per hour) | 328,900 | |
Overhead costs | ||
Indirect materials | $ 41,900 | |
Indirect labor | 176,800 | |
Power | 17,250 | |
Maintenance | 34,500 | |
DepreciationBuilding | 23,000 | |
DepreciationMachinery | 95,850 | |
Taxes and insurance | 15,300 | |
Supervisory salaries | 225,750 | 630,350 |
Total costs | $ 1,272,900 |
Required:
1. Prepare flexible overhead budgets for October showing amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels.
2. Compute the direct materials variance, including its price and quantity variances.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.
3. Compute the direct labor variance, including its rate and efficiency variances.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to two decimal places.
4. Prepare a detailed overhead variance report that shows the variances for individual items of overhead.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.
ANTUAN COMPANY Overhead Variance Report For Month Ended October 31
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started