Question

Antuan Company set the following standard costs for one unit of its product.

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

Solution 1&2:

Antuan company
Flexible Overhead Budget
For month ended Oct 31
Particulars	Flexible Budget		Flexible Budget for
	Variable amount per unit	Total fixed cost	65% of capacity	75% of capacity	85% of capacity
Sales (In units)			13000	15000	17000
Variable overhead costs:
Indirect materials	$1.00		$13,000.00	$15,000.00	$17,000.00
Indirect labor	$5.00		$65,000.00	$75,000.00	$85,000.00
Power	$1.00		$13,000.00	$15,000.00	$17,000.00
Repairs and maintenance	$2.00		$26,000.00	$30,000.00	$34,000.00
Total variable costs	$9.00		$117,000.00	$135,000.00	$153,000.00
Fixed overhead costs:
Depreciation - Building		$25,000.00	$25,000.00	$25,000.00	$25,000.00
Depreciation - Machinery		$71,000.00	$71,000.00	$71,000.00	$71,000.00
Taxes and Insurance		$17,000.00	$17,000.00	$17,000.00	$17,000.00
Supervision		$196,000.00	$196,000.00	$196,000.00	$196,000.00
Total fixed costs		$309,000.00	$309,000.00	$309,000.00	$309,000.00
Total overhead costs			$426,000.00	$444,000.00	$462,000.00

Solution 3:

Direct Material Cost Variance
Actual Cost				Standard cost for actual quantity				Standard Cost
AQ *	AP =			AQ *	SP =			SQ *	SP =
76500	$5.20	$397,800.00		76500	$5.00	$382,500.00		75000	$5.00	$375,000.00
			$15,300 U				$7,500 U
			Direct Material Price Variance				Direct Material Qty variance
Direct material price variance				$15,300.00	U
Direct material quantity variance				$7,500.00	U
Direct material cost variance				$22,800.00	U