Question

Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0 Ibs. @ $5.00 per Ib.) Direct labor (1.8 hrs. @ $11.00 per hr.) Overhead (1.8 hrs. @ $18.50 per hr.) Total standard cost $20.00 19.80 33.30 $73.10 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 17,000 Supervision 252,500 Total fixed overhead costs Total overhead costs $ 135,000 364,500 $499,500 The company incurred the following actual costs when it operated at 75% of capacity in October. $ 311,100 235,200 Direct materials (61,000 Ibs. @ $5.10 per lb.) Direct labor (21,000 hrs. @ $11.20 per hr.) Overhead costs Indirect materials Indirect labor Power Repairs and maintenance Depreciation-Building Depreciation Machinery Taxes and insurance Supervision Total costs $ 41,050 176,200 17,250 34,500 24,000 95,850 15,300 252,500 656,650 $1,202,950

Answer 1

			Flexible overhead Budget
			For the month oct 31
			Flexible budget		Flexible Budget for
			Variable	total	65% of	75% of	85% of
			amt pu	fixed cost	capacity	capacity	capacity
Sales in (units)					13000	15000	17000
Variable Costs
Indirect materials			1		13000	15000	17000
Indirect labor			5		65000	75000	85000
Power			1		13000	15000	17000
Repairs & Maintenance			2		26000	30000	34000
total variable costs					117000	135000	153000
Fixed costs
Depreciation-Building				24,000	24,000	24,000	24,000
Depreciation-Machinery				71,000	71,000	71,000	71,000
Taxes and insurance				17,000	17,000	17,000	17,000
Supervision				252,500	252,500	252,500	252,500
total fixed costs				364,500	364,500	364,500	364,500
total overhead costs					481,500	499,500	517,500

Actual cost								Standard cost
AQ	*	AP		AQ	*	SR		SQ	*	SR
61000	*	5.1		61000	*	5		60000	*	5
	311,100				305000				300000
			6,100				5000
direct materials price variance				6,100	U
direct materials quantity variance				5,000	U
total direct materials variance				11,100	U

Actual cost								Standard cost
AH	*	AR		AH	*	SR		SH	*	SR
21000	*	11.2		21000	*	11		27000	*	11
	235,200				231000				297000
			4,200				66000
Direct labor rate variance				4,200	U
Direct labor Efficiency variance				66,000	F
total direct labor variance				61,800	F

			Antuan Company
		Overhead Variance Report
Expected production volume			75% of capacity
production level achieved			75% of capacity
Volume variance			No variance
			Flexible	Actual	Variances	Fav/unfav
			budget	results
Variable Costs
Indirect materials			15,000	41,050	26,050	U
Indirect labor			75,000	176,200	101,200	U
Power			15,000	17,250	2,250	U
Repairs & Maintenance			30,000	34,500	4,500	U
total variable costs			135,000	269,000	134,000	U
Fixed costs
Depreciation-Building			24,000	24,000	0	N
Depreciation-Machinery			71,000	95,850	24,850	U
Taxes and insurance			17,000	15,300	1,700	F
Supervision			252,500	252,500	0	N
total fixed costs			364,500	387,650	23,150	U
total overhead costs			499,500	656,650	157,150	U