Question

HOW DO I CALCULATE?

Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs. @ $6.00 per Ib.) Direct labor (1.6 hrs. @ $13.00 per hr.) Overhead (1.6 hrs. @ $18.50 per hr.) Total standard cost $18.00 20.80 29.60 $ 68.40 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 23,000 Depreciation Machinery 70,000 Taxes and insurance 17,000 Supervision 199,000 Total fixed overhead costs Total overhead costs $135,000 309,000 $444,000 The company incurred the following actual costs when it operated at 75% of capacity in October. $ 285,200 275,100 Direct materials (46,000 Ibs. @ $6.20 per lb.) Direct labor (21,000 hrs. @ $13.10 per hr.) Overhead costs Indirect materials Indirect labor Power Repairs and maintenance Depreciation-Building Depreciation Machinery Taxes and insurance Supervision Total costs $ 41,700 176,900 17,250 34,500 23,000 94,500 15,300 199,000 602, 150 $1,162,450

Answer 1

ANTUAN COMPANY
Flexible Overhead Budgets
For Month Ended October 31
	Flexible Budget		Flexible Budget for
	Variable Amount per Unit	Total Fixed Cost	65% of capacity	75% of capacity	85% of capacity
Sales (in units)			13,000	15,000	17,000
Variable overhead costs
Indirect materials	1.00		13,000	15,000	17,000
Indirect labor	5.00		65,000	75,000	85,000
Power	1.00		13,000	15,000	17,000
Repairs and maintenance	2.00		26,000	30,000	34,000
Total variable overhead costs	9.00		117000	135000	153000
Fixed overhead costs
Depreciation—Building		23,000	23,000	23,000	23,000
Depreciation—Machinery		70,000	70,000	70,000	70,000
Taxes and insurance		17,000	17,000	17,000	17,000
Supervision		199,000	199,000	199,000	199,000
Total fixed overhead costs		309000	309000	309000	309000
Total overhead costs			426000	444000	462000