Prepare a detailed overhead variance report that shows the variances for individual items of overhead. indicate the effect of each variance by selecting for favorable, unfavorable and No variance.
Saved work i Required information [The following information applies to the questions displayed below.] Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs. @ $4.00 per Ib. ) $12.00 Direct labor (1.8 hrs. @ $12.00 per hr. ) 21. 60 Overhead (1.8 hrs. @ $18.50 per hr. ) 33 . 30 Total standard cost $66 .90 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume 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. 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 Depreciation-Building 24, 000 Depreciation-Machinery 71, 000 Taxes and insurance 18, 000 Supervision 251, 500 Total fixed overhead costs 364, 500 Total overhead costs $499 , 500 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46, 000 Ibs. @ $4.10 per lb. ) Direct labor (19, 000 hrs. @ $12. 10 per hr. ) 188 , 600 229 , 900 Overhead costs Indirect materials $ 41, 500 Indirect labor 176, 750 Power Repairs and maintenance 17, 250 34, 500 Depreciation-Building Depreciation-Machinery 24 , 000 Taxes and insurance 95 , 850 Supervision 16, 200 251, 500 657, 550 Total costs $1, 076, 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. ANTUAN COMPANY Flexible Overhead Budgets For Month Ended October 31 Flexible Budget Flexible Budget for Prev 14 15Homework i Iaxes allu Insurance 10 , wOv Supervision 251, 500 Total fixed overhead costs 364, 500 Total overhead costs $499, 500 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46, 000 Ibs. @ $4. 10 per lb. ) $ 188, 600 Direct labor (19, 000 hrs. @ $12. 10 per hr. ) 229, 900 Overhead costs Indirect materials $ 41, 500 Indirect labor 176, 750 Power 17, 250 Repairs and maintenance 34 , 500 Depreciation-Building 24 , 000 Depreciation-Machinery 95 , 85 Taxes and insurance 16, 200 Supervision 251, 500 657, 550 Total costs $1, 076, 050 Required: &2. Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, an capacity levels and classify all items listed in the fixed budget as variable or fixed. ANTUAN COMPANY Flexible Overhead Budgets For Month Ended October 31 Flexible Budget Flexible Budget for Variable Total Fixed 65% of 75% of Amount per Unit Cost 85% of capacity capacity capacity Sales (in units Variable overhead costs Indirect material $ 1.00 3,000 15,000 17,000 Indirect labor 5.00 65,000 75,000 85,000 Power 1.00 13,000 15,000 17,000 Repairs and maintenance 2.00 26,000 30,000 $4,000 $ 9.00 17,000 135,000 153,000 Fixed overhead costs Depreciation-Building $ 24,000 24,000 24,000 Depreciation-Machinery 24,000 71,000 71,000 71,000 Taxes and insurance 71,000 251,500 251,500 251,500 Supervision 251,500 Total fixed costs 346,500 346,500 Total overhead costs 346,500 346,500 $ 368,500 $ 481,500 $ 499,500
