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 (6 Ibs. @ $5 per Ib.) | $ | 30 |
| Direct labor (2 hrs. @ $17 per hr.) | 34 | |
| Overhead (2 hrs. @ $18.50 per hr.) | 37 | |
| Total standard cost | $ | 101 |
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 | $ | 45,000 | |||
| Indirect labor | 180,000 | ||||
| Power | 45,000 | ||||
| Repairs and maintenance | 90,000 | ||||
| Total variable overhead costs | $ | 360,000 | |||
| Fixed overhead costs | |||||
| DepreciationBuilding | 24,000 | ||||
| DepreciationMachinery | 80,000 | ||||
| Taxes and insurance | 12,000 | ||||
| Supervision | 79,000 | ||||
| Total fixed overhead costs | 195,000 | ||||
| Total overhead costs | $ | 555,000 | |||
The company incurred the following actual costs when it operated at 75% of capacity in October.
| Direct materials (91,000 Ibs. @ $5.10 per lb.) | $ | 464,100 | |||
| Direct labor (30,500 hrs. @ $17.25 per hr.) | 526,125 | ||||
| Overhead costs | |||||
| Indirect materials | $ | 44,250 | |||
| Indirect labor | 177,750 | ||||
| Power | 43,000 | ||||
| Repairs and maintenance | 96,000 | ||||
| DepreciationBuilding | 24,000 | ||||
| DepreciationMachinery | 75,000 | ||||
| Taxes and insurance | 11,500 | ||||
| Supervision | 89,000 | 560,500 | |||
| Total costs | $ | 1,550,725 | |||
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.
| ANTUAN COMPANY | |||||
| Flexible Overhead Budgets | |||||
| For Month Ended October 31 | |||||
| Flexible Budget | Flexible Budget for | ||||
| Variable Amount per Unit | Total Fixed Cost | 65% of capacity | 75% of capacity | 85% of capacity | |
| Sales (in units) | not attempted | not attempted | not attempted | ||
| Variable overhead costs | |||||
| not attempted | not attempted | not attempted | not attempted | not attempted | not attempted |
| not attempted | not attempted | not attempted | not attempted | not attempted | not attempted |
| not attempted | not attempted | not attempted | not attempted | not attempted | not attempted |
| not attempted | not attempted | not attempted | not attempted | not attempted | not attempted |
| not attempted | not attempted | not attempted | not attempted | not attempted | not attempted |
| not attempted | $0.00 | 0 | 0 | 0 | |
| Fixed overhead costs | |||||
| not attempted | not attempted | not attempted | not attempted | not attempted | not attempted |
| not attempted | not attempted | not attempted | not attempted | not attempted | not attempted |
| not attempted | not attempted | not attempted | not attempted | not attempted | not attempted |
| not attempted | not attempted | not attempted | not attempted | not attempted | not attempted |
| not attempted | not attempted | not attempted | not attempted | not attempted | not attempted |
| not attempted | $0 | $0 | $0 | $0 | |
| Total overhead costs | not attempted | not attempted | |||
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Microeconomics Theory And Applications
Authors: Edgar K. Browning, Mark A. Zupan
10th Edition
0470128917, 9780470128916
