Antuan Company set the following standard costs per unit for its product. Direct materials (6 pounds @ $5 per pound) Direct labor (2 hours @ $17 per hour) Overhead (2 hours @ $18.50 per hour) Standard cost per unit $ 30 34 37 $ 101 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. $ 45,000 180,000 45,000 90,000 360,000 Overhead Budget (75% Capacity) Variable overhead costs Indirect materials Indirect labor Power Maintenance Total variable overhead costs Fixed overhead costs Depreciation-Building Depreciation Machinery Taxes and insurance Supervisory salaries Total fixed overhead costs Total overhead costs 24,000 80,000 12,000 79,000 195,000 $ 555,000 The company incurred the following actual costs when it operated at 75% of capacity in October. $ 464,100 526, 125 Direct materials (91,000 pounds @ $5.10 per pound) Direct labor (30,500 hours @ $17.25 per hour) Overhead costs Indirect materials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 44,250 177,750 43,000 96,000 24,000 75,000 11,500 89,000 560,500 $ 1,550,725 Required: 1. Prepare flexible overhead budgets for October showing amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels. ANTUAN COMPANY Flexible Overhead Budgets Flexible Budget at Capacity Level of Variable Amount Total Fixed 65% per Unit Cost 75% 85% For Month Ended October 31 Production (in units) Variable overhead costs Indirect materials Indirect labor Power Depreciation Machinery $ 0 $ 0 $ 0 $ 0 Fixed overhead costs $ 0 $ 0 $ 0 $ 0 Total overhead costs Supervisory salaries 89,000 560,500 $ 1,550,725 Total costs Compute the direct materials variance, including its price and quantity variances. (Indicate the effect of each variance by selecting vorable, unfavorable, or no variance.) Actual Cost Standard Cost 0 $ 0 $ $ O $ 0 0 Total costs $ 1,550,725 3. Compute the direct labor variance, including its rate and efficiency variances. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to two decimal places.) Actual Cost Standard Cost s O $ $ 0 $ O 0 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.) ANTUAN COMPANY Overhead Variance Report For Month Ended October 31 Expected production volume Production level achieved Volume variance Flexible Budget Actual Results Variances Fav./Unfav. Variable overhead costs Fixed overhead costs Total overhead costs Volume Variance $ 0 Volume variance Total overhead variance
