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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

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

4. Compute the direct labor cost variance, including its rate and efficiency variances. AH Actual Hours SH Standard Hours 1 AR Actual Rate SR Standard Rate Actual Cost Standard Cost

Answer 1

L AH 19000 Actual Cost X L X 252700 AR 13.30 AH 19000 X L X 247000 SR 13.00 Standard Cost SH X 30000 390000 SR 13.00 5700 143000 Direct Labor Rate Varaince 5700 Unfavorable Direct Labor Efficiency Variance 143000 Favorable Total Direct Labor Variance 137300 Favorable Factory Capacity =20,000 Units 75% Capacity = 20,000*75% StandardHours= SH For 1 Units * Total Prodcued = 15000*2.00) 15000 30000