Question
Problem 21-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, C2 [The following information applies
Problem 21-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, C2
[The following information applies to the questions displayed below.]
Antuan Company set the following standard costs for one unit of its product. |
Direct materials (5.0 Ibs. @ $5.00 per Ib.) | $ | 25.00 |
Direct labor (1.6 hrs. @ $12.00 per hr.) | 19.20 | |
Overhead (1.6 hrs. @ $18.50 per hr.) | 29.60 | |
Total standard cost | $ | 73.80 |
The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume 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 | ||||
Repairs and maintenance | 30,000 | ||||
Total variable overhead costs | $ | 135,000 | |||
Fixed overhead costs | |||||
Depreciationbuilding | 23,000 | ||||
Depreciationmachinery | 72,000 | ||||
Taxes and insurance | 17,000 | ||||
Supervision | 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 (76,500 Ibs. @ $5.20 per lb.) | $ | 397,800 | |||
Direct labor (29,000 hrs. @ $12.30 per hr.) | 356,700 | ||||
Overhead costs | |||||
Indirect materials | $ | 41,800 | |||
Indirect labor | 176,900 | ||||
Power | 17,250 | ||||
Repairs and maintenance | 34,500 | ||||
Depreciationbuilding | 23,000 | ||||
Depreciationmachinery | 97,200 | ||||
Taxes and insurance | 15,300 | ||||
Supervision | 197,000 | 602,950 | |||
Total costs | $ | 1,357,450 | |||
References
Section BreakProblem 21-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, C2
Problem 21-3A Part 1&2
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. |
Problem 21-3A Part 3
3. | Compute the direct materials cost variance, including its price and quantity variances. |
Problem 21-3A Part 4
4. | Compute the direct labor cost variance, including its rate and efficiency variances. |
Problem 21-3A Part 5
5. | Prepare a detailed overhead variance report that shows the variances for individual items of overhead. |
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