Question

Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0 Ibs. @ $6.00 per Ib.) Direct labor (1.8 hrs. @ $11.00 per hr.) Overhead (1.8 hrs. @ $18.50 per hr.) Total standard cost $24.00 19.80 33.30 $77.10 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 $ 30,000 Indirect labor 75,000 Power 30,000 Repairs and maintenance 30,000 Total variable overhead costs Fixed overhead costs Depreciation-Building 25,000 Depreciation-Machinery 72,000 Taxes and insurance 18,000 Supervision 219,500 Total fixed overhead costs Total overhead costs $ 165,000 334,500 $499,500

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	2.00		26,000	30,000	34,000
Indirect labor	5.00		65,000	75,000	85,000
Power	2.00		26,000	30,000	34,000
Repairs and maintenance	2.00		26,000	30,000	34,000
Total variable overhead costs	11.00		143000	165000	187000
Fixed overhead costs
Depreciation—Building		25,000	25,000	25,000	25,000
Depreciation—Machinery		72,000	72,000	72,000	72,000
Taxes and insurance		18,000	18,000	18,000	18,000
Supervision		219,500	219,500	219,500	219,500
Total fixed overhead costs		334500	334500	334500	334500
Total overhead costs			477500	499500	521500