Question

Required information [The following information applies to the questions displayed below.) Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0 Ibs. @ $5.00 per Ib.) Direct labor (1.8 hrs. @ $11.00 per hr.) Overhead (1.8 hrs. @ $18.50 per hr.) Total standard cost $ 20.00 19.80 33.30 $73.10 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 Fixed overhead costs Depreciation-Building 24,000 Depreciation-Machinery 71,000 Taxes and insurance 17,000 Supervision 252,500 Total fixed overhead costs Total overhead costs $135,000 364,500 $ 499,500 The company incurred the following actual costs when it operated at 75% of capacity in October.

Answer 1

5
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	41,850	26,850	Unfavorable
Indirect labor	75,000	176,350	101,350	Unfavorable
Power	15,000	17,250	2,250	Unfavorable
Repairs and maintenance	30,000	34,500	4,500	Unfavorable
Total variable costs	135000	269950	134,950	Unfavorable
Fixed costs
Depreciation—Building	24,000	24,000	0	No variance
Depreciation—Machinery	71,000	95,850	24,850	Unfavorable
Taxes and insurance	17,000	15,300	1,700	Favorable
Supervision	252,500	252,500	0	No variance
Total fixed costs	364500	387650	23,150	Unfavorable
Total overhead costs	499500	657600	158,100	Unfavorable