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Problem 8-3A (Algo) Flexible overhead budget; materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, P4 Skip to question [The following

Problem 8-3A (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 (1.7 hours @ $11.00 per hour) 18.70
Overhead (1.7 hours @ $18.50 per hour) 31.45
Standard cost per unit $ 75.15

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 70,000
Taxes and insurance 18,000
Supervisory salaries 224,750
Total fixed overhead costs 336,750
Total overhead costs $ 471,750

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

Direct materials (76,000 pounds @ $5.20 per pound) $ 395,200
Direct labor (20,000 hours @ $11.30 per hour) 226,000
Overhead costs
Indirect materials $ 41,800
Indirect labor 176,600
Power 17,250
Maintenance 34,500
DepreciationBuilding 24,000
DepreciationMachinery 94,500
Taxes and insurance 16,200
Supervisory salaries 224,750 629,600
Total costs $ 1,250,800

Problem 8-3A (Algo) Part 1

Required: 1. Prepare flexible overhead budgets for October showing amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels.

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ANTUAN COMPANY Flexible Overhead Budgets

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