Question

Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs. @ $4.00 per Ib.) Direct labor (1.7 hrs. @ $11.00 per hr.) Overhead (1.7 hrs. @ $18.50 per hr.) Total standard cost $12.00 18.70 31.45 $62.15 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 16,000 Supervision 225,750 Total fixed overhead costs $135,000 336,750 $471,750 Total overhead costs

Answer 1

Solution:

Flexible overhead Budgets
For Month Ended Octobber 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)			13000	15000	17000
Variable overhead costs
Indirect materials	1		13000	15,000	17000
Indirect labour	5		65000	75,000	85000
Power	1		13000	15,000	17000
Repairs and maintenance	2		26000	30,000	34000
Total variable costs	9		117000	1,35,000	153000
Fixed overhead costs
Depreciation - Building		24,000	24,000	24,000	24,000
Depreciation - Machinery		71,000	71,000	71,000	71,000
Taxes and insurance		16,000	16,000	16,000	16,000
Supervision		2,25,750	2,25,750	2,25,750	2,25,750
Total fixed costs		3,36,750	336750	3,36,750	3,36,750
Total overhead costs			4,53,750	4,71,750	4,89,750