Antuan Company set the following standard costs per unit for its product. Direct materials (5.0 pounds @ $5.00 per pound) $ 25.00 Direct labor (1.9 hours @ $11.00 per hour) Overhead (1.9 hours @ $18.50 per hour) Standard cost per unit $ 81.05 20.90 35.15 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. $ 15,000 75,000 15,000 30,000 135,000 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 25,000 71,000 16,000 280, 250 392,250 $ 527,250 The company incurred the following actual costs when it operated at 75% of capacity in October. $ 385,050 235,200 Direct materials (75,500 pounds @ $5.10 per pound) Direct labor (21,000 hours @ $11.20 per hour) Overhead costs Indirect materials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 41,950 176,550 17,250 34,500 25,000 95,850 14,400 280,250 685,750 $ 1,306,000 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 For Month Ended October 31 Variable Amount Total Fixed per Unit Cost 65% 75% 85% Production (in units) Variable overhead costs Fixed overhead costs Total overhead costs 2. Compute the direct materials variance, including its price and quantity variances. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.) Actual Cost Standard Cost 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 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 Favorable/Unfavorable Variable overhead costs Fixed overhead costs Total overhead costs Volume Variance Volume variance Total overhead variance
