Question

Antuan Company set the following standard costs for one unit of its product Direct materials (3.0 Ibs. $5.00 per Ib.) Direct labor (1.6 hrs. e $11.00 per hr.) Overhead (1.6 hrs. e $18.50 per hr.) $15.00 17.60 29.60 Total standard cost $62.20 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 Capaeity) Variable overhead costs Indirect materials $ 15,000 Indirect 1abor 75,000 Power 15,000 30,000 Repairs and maintenance Total variable overhead costs Fixed overhead costs Depreciation-Building Depreciation-Machinery Taxes and insurance Supervision Total fixed overhead costs $135,000 24,000 71,000 17,000 197,000 309,000 Total overhead costs $444,000

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	41,450	26,450	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	269550	134,550	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	197,000	197,000	0	No variance
Total fixed costs	309000	332150	23,150	Unfavorable
Total overhead costs	444000	601700	157,700	Unfavorable