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.) Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs. @ $5.00 per Ib.) Direct labor (1.7 hrs. @ $14.00 per hr.) Overhead (1.7 hrs. @ $18.50 per hr.) Total standard cost $15.00 23.80 31.45 $70.25 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. $135,000 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 25,000 Depreciation-Machinery 71,000 Taxes and insurance 18,000 Supervision 222,750 Total fixed overhead costs Total overhead costs 336,750 $471,750

Answer 1

Actual Cost								Standard cost
AQ	AP	AQ*AP		AQ	SP	AQ*SP		SQ	SP	SQ*SP
46000	5.20	239200		46000	5	230000		45000	5	225000
			9200				5000
Material price variance				9200	Unfavorable
Material quantity variance				5000	Unfavorable
Total material variance				14200	Unfavorable