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Antuan Company set the following standard costs for one unit of its product.

Direct materials (4.0 Ibs. @ $6.00 per Ib.) $ 24.00
Direct labor (2.0 hrs. @ $13.00 per hr.) 26.00
Overhead (2.0 hrs. @ $18.50 per hr.) 37.00
Total standard cost $ 87.00


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.

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
Depreciation—Building 24,000
Depreciation—Machinery 72,000
Taxes and insurance 17,000
Supervision 307,000
Total fixed overhead costs 420,000
Total overhead costs $ 555,000


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

Direct materials (60,500 Ibs. @ $6.10 per lb.) $ 369,050
Direct labor (19,000 hrs. @ $13.30 per hr.) 252,700
Overhead costs
Indirect materials $ 41,400
Indirect labor 176,250
Power 17,250
Repairs and maintenance 34,500
Depreciation—Building 24,000
Depreciation—Machinery 97,200
Taxes and insurance 15,300
Supervision 307,000 712,900
Total costs $ 1,334,650

rev: 03_28_2018_QC_CS-122864

5. Prepare a detailed overhead variance report that shows the variances for individual items of overhead.

5. Prepare a detailed overhead variance report that shows the variances for individual items of overhead. ANTUAN COMPANY Over

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Answer #1
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ANTUAN COMPANY
Overhead Variance Report
For Month Ended October 31
Expected production volume 75% of capacity
Production level achieved 75% of capacity
Volume variance No variance
Flexible Budget Actual Results Variances Fav. / Unfav.
Variable costs
Indirect materials 15,000 41,400 26,400 Unfavorable
Indirect labor 75,000 176,250 101,250 Unfavorable
Power 15,000 17,250 2,250 Unfavorable
Repairs and maintenance 30,000 34,500 4,500 Unfavorable
Total variable costs 135000 269400 134,400 Unfavorable
Fixed costs
Depreciation—Building 24,000 24,000 0 No variance
Depreciation—Machinery 72,000 97,200 25,200 Unfavorable
Taxes and insurance 17,000 15,300 1,700 Favorable
Supervision 307,000 307,000 0 No variance
Total fixed costs 420000 443500 23,500 Unfavorable
Total overhead costs 555000 712900 157,900 Unfavorable
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