Question

Antuan Company set the following standard costs for one unit of its product. Direct materials (5.0 Ibs. @ $5.00 per Ib.) Direct labor (1.6 hrs. @ $10.00 per hr.) 16.00 Overhead (1.6 hrs. @ $18.50 per hr.) 29.60 Total standard cost $79.60 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volu capacity of 20,000 units per month. Following are the company's budgeted overhead costs pe level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials $ 15,000 Indirect labor 75,000 Power 15,800 Repairs and maintenance 30,000 Total variable overhead costs $135, eee Fixed overhead costs Depreciation-Building 25,000 Depreciation-Machinery 71, eee Taxes and insurance 17,000 Supervision 196, eee Total fixed overhead costs 309,00 Total overhead costs $444,000

Answer 1

Overhead Variance Report
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 material	$15,000	$41,900	$26,900	Unfavorable
Indirect labor	75,000	176,900	101,900	Unfavorable
Power	15,000	17,250	2,250	Unfavorable
Repairs and maintenance	30,000	34,500	4,500	Unfavorable
Total variable costs	135,000	270,550	135,550	Unfavorable
Fixed costs
Depreciation-Building	25,000	25,000	0	No variance
Depreciation-Machinery	71,000	95,850	24,850	Unfavorable
Taxes and insurance	17,000	15,300	1,700	Favorable
Supervision	196,000	196,000	0	No variance
Total fixed costs	309,000	332,150	23,150	Unfavorable
Total overhead cost	$444,000	$602,700	$158,700	Unfavorable