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

Direct materials (4.0 Ibs. @ $6.00 per Ib.)	$	24.00
Direct labor (2.0 hrs. @ $13.00 per hr.)		26.00
Overhead (2.0 hrs. @ $18.50 per hr.)		37.00
Total standard cost	$	87.00

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		24,000
Depreciation—Machinery		72,000
Taxes and insurance		17,000
Supervision		307,000
Total fixed overhead costs					420,000
Total overhead costs				$	555,000

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

Direct materials (60,500 Ibs. @ $6.10 per lb.)				$	369,050
Direct labor (19,000 hrs. @ $13.30 per hr.)					252,700
Overhead costs
Indirect materials	$	41,400
Indirect labor		176,250
Power		17,250
Repairs and maintenance		34,500
Depreciation—Building		24,000
Depreciation—Machinery		97,200
Taxes and insurance		15,300
Supervision		307,000			712,900
Total costs				$	1,334,650

rev: 03_28_2018_QC_CS-122864

Required:
1&2. Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed.

Required: 1&2. Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed. ANTUAN COMPANY Flexible Overhead Budgets For Month Ended October 31 Flexible Budget Variable Amount Total Fixed 65% of per Unit Cost capacity Flexible Budget for 75% of capacity 85% of capacity Sales (in units) Variable overhead costs Indirect materials Indirect labor Power Repairs and maintenance $ 0.00 0 0 Total variable costs Fixed overhead costs Depreciation Building Depreciation Machinery Taxes and insurance Supervision 0 0 Total fixed costs Total overhead costs

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	1.00		13,000	15,000	17,000
Indirect labor	5.00		65,000	75,000	85,000
Power	1.00		13,000	15,000	17,000
Repairs and maintenance	2.00		26,000	30,000	34,000
Total variable costs	9.00		117000	135000	153000
Fixed overhead costs
Depreciation—Building		24,000	24,000	24,000	24,000
Depreciation—Machinery		72,000	72,000	72,000	72,000
Taxes and insurance		17,000	17,000	17,000	17,000
Supervision		307,000	307,000	307,000	307,000
Total fixed costs		420000	420000	420000	420000
Total overhead costs			537000	555000	573000