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Problem 21-3A (Algo) Flexible overhead budget; materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, P4 Skip to question [The following

Problem 21-3A (Algo) Flexible overhead budget; materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, P4

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[The following information applies to the questions displayed below.] 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 (1.6 hours @ $12.00 per hour) 19.20
Overhead (1.6 hours @ $18.50 per hour) 29.60
Standard cost per unit $ 73.80

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 17,000
Supervisory salaries 197,000
Total fixed overhead costs 309,000
Total overhead costs $ 444,000

The company incurred the following actual costs when it operated at 75% of capacity in October.

Direct materials (76,000 pounds @ $5.10 per pound) $ 387,600
Direct labor (20,000 hours @ $12.30 per hour) 246,000
Overhead costs
Indirect materials $ 41,600
Indirect labor 176,300
Power 17,250
Maintenance 34,500
DepreciationBuilding 24,000
DepreciationMachinery 95,850
Taxes and insurance 15,300
Supervisory salaries 197,000 601,800
Total costs $ 1,235,400

Problem 21-3A (Algo) Part 4

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.)

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