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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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