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

Solution:

H Antuan company Flexible Overhead Budget For month ended Oct 31 Flexible Budget Variable Total fixed amount per 65% of capacity cost Flexible Budget for Particulars 75% of capacity 85% of capacity unit 13000 15000 17000 10 12 13 Sales (In units) Variable overhead costs: Indirect materials Indirect labor Power Repairs and maintenance Total variable costs Fixed overhead costs: Depreciation - Building Depreciation - Machinery Taxes and Insurance Supervision Total fixed costs $1.00 $5.00 $1.00 $2.00 $9.00 $13,000 $65,000 $13,000 $26,000 $117,000 $15,000 $75,000 $15,000 $30,000 $135,000 $17,000 $85,000 $17,000 $34,000 $153,000 15 17 19 20 $25,000 $71,000 $18,000 $222,750 $336,750 $25,000 $71,000 $18,000 $222,750! $336,750 $25,000 $71,000 $18,000 $222,750 $336,750 $25,000 $71,000 $18,000 $222,750 $336,750 22 Total overhead costs $453,750 $471,750 $489,750 24 25 26 -119 (9) ) Sheet688 ) Sheet693 Sheet36 (25) Sheet93 (2) Sheet702 Sheet708 (2) Sheet181 (5)