Question

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

Direct materials (4.0 Ibs. @ $5.00 per Ib.)	$	20.00
Direct labor (1.7 hrs. @ $12.00 per hr.)		20.40
Overhead (1.7 hrs. @ $18.50 per hr.)		31.45
Total standard cost	$	71.85

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				$	135,000
Fixed overhead costs
Depreciation—Building		23,000
Depreciation—Machinery		72,000
Taxes and insurance		18,000
Supervision		223,750
Total fixed overhead costs					336,750
Total overhead costs				$	471,750

The company incurred the following actual costs when it operated at 75% of capacity in October.

Direct materials (61,000 Ibs. @ $5.20 per lb.)				$	317,200
Direct labor (21,000 hrs. @ $12.20 per hr.)					256,200
Overhead costs
Indirect materials	$	41,200
Indirect labor		176,300
Power		17,250
Repairs and maintenance		34,500
Depreciation—Building		23,000
Depreciation—Machinery		97,200
Taxes and insurance		16,200
Supervision		223,750			629,400
Total costs				$	1,202,800

rev: 03_28_2018_QC_CS-122864

5. Prepare a detailed overhead variance report that shows the variances for individual items of overhead.

ANTUAN COMPANY Overhead Variance Report For Month Ended October 31 Expected production volume Production level achieved Volume variance Flexible Budget Actual Results Variances Fav. / Unfav. Variable costs Fixed costs Total overhead costs

Answer 1

Ans: 5.

Preparation of a detailed overhead variance report that shows the variances for individual items of overhead.

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	$15,000	$41,200	$26,200	Unfavorable
Indirect labor	75,000	176,300	101,300	Unfavorable
Power	15,000	17,250	2,250	Unfavorable
Repairs and maintenance	30,000	34,500	4,500	Unfavorable
Total variable costs	135,000	269,250	134,250	Unfavorable
Fixed costs
Depreciation-Building	23,000	23,000	0	No variance
Depreciation-Machinery	72,000	97,200	25,200	Unfavorable
Taxes and insurance	18,000	16,200	1,800	Favorable
Supervision	223,750	223,750	0	No variance
Total fixed costs	336,750	360,150	23,400	Unfavorable
Total overhead costs	$471,750	$629,400	$157,650	Unfavorable