Question

Problem 21-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, C2 [The following information applies to the questions displayed below.]

Problem 21-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, C2 [The following information applies to the questions displayed below.) Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs. @ $6.00 per Ib.) $18.00 Direct labor (1.7 hrs. @ $11.00 per hr.) 18.70 Overhead (1.7 hrs. @ $18.50 per hr.) 31.45 Total standard cost $68.15 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 224,750 Total fixed overhead costs Total overhead costs $135,000 336,750 $ 471,750 The company incurred the following actual costs when it operated at 75% of capacity in October. $ 288,300 257,600 Direct materials (46,500 Ibs. @ $6.20 per lb.) Direct labor (23,000 hrs. @ $11.20 per hr.) Overhead costs Indirect materials $ 41,750 Indirect labor 176, 250 Power 17,250 Repairs and maintenance 34,500 Depreciation-Building 24,000 Depreciation-Machinery 95,850 Taxes and insurance 15,300 Supervision 224,750 Total costs 629,650 $1,175,550

Answer 1

			Flexible overhead Budget
			For the month oct 31
			Flexible budget		Flexible Budget for
			Variable	total	65% of	75% of	85% of
			amt pu	fixed cost	capacity	capacity	capacity
Sales in (units)					13000	15000	17000
Variable Costs
Indirect materials			1		13000	15000	17000
Indirect labor			5		65000	75000	85000
Power			1		13000	15000	17000
Repairs & Maintenance			2		26000	30000	34000
total variable costs					117000	135000	153000
Fixed costs
Depreciation-Building				24,000	24,000	24,000	24,000
Depreciation-Machinery				71,000	71,000	71,000	71,000
Taxes and insurance				17,000	17,000	17,000	17,000
Supervision				224,750	224,750	224,750	224,750
total fixed costs				336,750	336,750	336,750	336,750
total overhead costs					453,750	471,750	489,750
Actual cost								Standard cost
AQ	*	AP		AQ	*	SR		SQ	*	SR
46500	*	6.2		46500	*	6		45000	*	6
	288,300				279000				270000
			9,300				9000
direct materials price variance				9,300	U
direct materials quantity variance				9,000	U
total direct materials variance				18,300	U

Actual cost								Standard cost
AH	*	AR		AH	*	SR		SH	*	SR
23000	*	11.2		23000	*	11		25500	*	11
	257,600				253000				280500
			4,600				27500
Direct labor rate variance				4,600	U
Direct labor Efficiency variance				27,500	F
total direct labor variance				22,900	F

			Antuan Company
		Overhead Variance Report
Expected production volume			75% of capacity
production level achieved			75% of capacity
Volume variance			No variance
			Flexible	Actual	Variances	Fav/unfav
			budget	results
Variable Costs
Indirect materials			15,000	41,750	26,750	U
Indirect labor			75,000	176,250	101,250	U
Power			15,000	17,250	2,250	U
Repairs & Maintenance			30,000	34,500	4,500	U
total variable costs			135,000	269,750	134,750	U
Fixed costs
Depreciation-Building			24,000	24,000	0	N
Depreciation-Machinery			72,000	95,850	23,850	U
Taxes and insurance			16,000	15,300	700	F
Supervision			224,750	224,750	0	N
total fixed costs			336,750	359,900	23,150	U
total overhead costs			471,750	629,650	157,900	U