Question
Antuan Company set the following standard costs per unit for its product. Direct materials (3.0 pounds @ $6.00 per pound) $ 18.00 Direct labor (2.0
Antuan Company set the following standard costs per unit for its product.
Direct materials (3.0 pounds @ $6.00 per pound) | $ 18.00 |
---|---|
Direct labor (2.0 hours @ $11.00 per hour) | 22.00 |
Overhead (2.0 hours @ $18.50 per hour) | 37.00 |
Standard cost per unit | $ 77.00 |
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 | 24,000 |
DepreciationMachinery | 71,000 |
Taxes and insurance | 18,000 |
Supervisory salaries | 307,000 |
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 (46,000 pounds @ $6.20 per pound) | $ 285,200 | |
---|---|---|
Direct labor (22,000 hours @ $11.30 per hour) | 248,600 | |
Overhead costs | ||
Indirect materials | $ 41,600 | |
Indirect labor | 176,850 | |
Power | 17,250 | |
Maintenance | 34,500 | |
DepreciationBuilding | 24,000 | |
DepreciationMachinery | 95,850 | |
Taxes and insurance | 16,200 | |
Supervisory salaries | 307,000 | 713,250 |
Total costs | $ 1,247,050 |
4. Prepare a detailed overhead variance report that shows the variances for individual items of overhead. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.)
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