Question

Required information [The following information applies to the questions displayed below.) Antuan Company set the following standard costs for one unit of its product. Direct materials (6 Ibs. $5 per Ib.) Direct labor (2 hrs. $17 per hr.) Overhead (2 hrs. $18.50 per hr.) Total standard cost $ 30 34 37 $ 101 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 $ 45,000 Indirect labor 180,000 Power 45,000 Repairs and maintenance 90,000 Total variable overhead costs $360,000 Fixed overhead costs Depreciation-Building 24,000 Depreciation-Machinery 80,000 Taxes and insurance 12,000 Supervision 79,000 Total fixed overhead costs 195,000 Total overhead costs $555,000 The company incurred the following actual costs when it operated at 75% of capacity in October. $ 464, 100 526, 125 Direct materials 91.000 lbs. @ $5. 10 per lb.) Direct labor (30, 500 hrs. $17.25 per hr.) verhead costs Indirect materials Indirect labor Power Repairs and maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervision Total costs $ 44, 250 177, 750 43,000 96,000 24,000 75,000 11, 500 89,000 560, 500 $1,550, 725

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	3.00		39,000	45,000	51,000
Indirect labor	12.00		156,000	180,000	204,000
Power	3.00		39,000	45,000	51,000
Repairs and maintenance	6.00		78,000	90,000	102,000
Total variable overhead costs	24.00		312000	360000	408000
Fixed overhead costs
Depreciation—Building		24,000	24,000	24,000	24,000
Depreciation—Machinery		80,000	80,000	80,000	80,000
Taxes and insurance		12,000	12,000	12,000	12,000
Supervision		79,000	79,000	79,000	79,000
Total fixed overhead costs		195000	195000	195000	195000
Total overhead costs			507000	555000	603000

3
Actual Cost								Standard Cost
AQ	x	AP		AQ	x	SP		SQ	x	SP
91,000	x	5.10		91,000	x	$5.00		90,000	x	$5.00
	464100				455000				450000
			9100				5000
Direct materials price variance				9100	Unfavorable
Direct materials quantity variance				5000	Unfavorable
Total direct materials variance				14100	Unfavorable
4
Actual Cost								Standard Cost
AH	x	AR		AH	x	SR		SH	x	SR
30,500	x	$17.25		30,500	x	$17.00		30,000	x	$17.00
	526125				518500				510000
			7625				8500
Direct labor rate variance				7625	Unfavorable
Direct labor efficiency variance				8500	Unfavorable
Total direct labor variance				16125	Unfavorable

5
ANTUAN COMPANY
Overhead Variance Report
For Month Ended October 31
Expected production volume	75% of capacity
Production level achieved	75% of capacity
Volume variance	No variance
	Flexible Budget	Actual Results	Variances	Fav. / Unfav.
Variable costs
Indirect materials	45,000	44,250	750	Favorable
Indirect labor	180,000	177,750	2,250	Favorable
Power	45,000	43,000	2,000	Favorable
Repairs and maintenance	90,000	96,000	6,000	Unfavorable
Total variable costs	360000	361000	1,000	Unfavorable
Fixed costs
Depreciation—Building	24,000	24,000	0	No variance
Depreciation—Machinery	80,000	75,000	5,000	Favorable
Taxes and insurance	12,000	11,500	500	Favorable
Supervision	79,000	89,000	10,000	Unfavorable
Total fixed costs	195000	199500	4,500	Unfavorable
Total overhead costs	555000	560500	5,500	Unfavorable