Required information Problem 8-3A 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.) Direct labor (2.0 hrs. @ $12.00 per hr.) Overhead (2.0 hrs. @ $18.50 per hr.) Total standard cost $25.00 24.00 37.00 $86.00 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% capacity level. $135,000 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 Fixed overhead costs Depreciation Building 24,000 Depreciation-Machinery 70,000 Taxes and insurance 16,000 Supervision 310,000 Total fixed overhead costs Total overhead costs 420,000 $555,000 $ 15,000 75,000 15,000 30,000 $135,000 Indirect materials Indirect labore Power Repairs and maintenance 3 Total variable overhead costs Fixed overhead costs Depreciation-Building Depreciation Machinery Taxes and insurance Supervision Total fixed overhead costs Total overhead costs 24,000 70,000 16,000 310,000 420,000 $555,000 The company incurred the following actual costs when it operated at 75% of capacity in Octobe $ 395, 200 260,400 Direct materials (76,000 lbs. @ $5.20 per Ib.) Direct labor (21,000 hrs. @ $12.40 per hr.) Overhead costs Indirect materials R Indirect labore bor Power Repairs and maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervision Total costs $ 41,700 176, 550 17, 250 34,500 24,000 94,500 14.400 310,000 712, 900 $1,368,500 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 Variable Total Fixed 65% of Amount per Unit Cost capacity Flexible Budget for 75% of 75 of capacity 85% of capacity Sales in units) Variable overhead costs Fixed overhead costs Total overhead costs Problem 8-3A Part 3 3. Compute the direct materials cost variance, including its price and quantity variances. AQ = Actual Quantity SQ = Standard Quantity AP = Actual Price SP = Standard Price Actual Cost Standard Cost 4. Compute the direct labor cost variance, including its rate and efficiency variances. AH = Actual Hours SH = Standard Hours AR = Actual Rate SR = Standard Rate Actual Cost Standard Cost 5. Prepare a detailed overhead variance report that shows the variances for individual items of overhead. ANTUAN COMPANY Overhead Variance Report For Month Ended October 31 Expected production volume Production level achieved Volume variance Flexible Budget Actual Results Variances Fav. Tuntav. Variable costs Indirect labore Power Repairs and maintenance Fixed costs Total overhead costs