Question

Antuan Company set the following standard costs for one unit of its product. Direct materials (5.0 Ibs. $4.00 per Ib.) Direct labor (1.9 hrs. $12.00 per hr.) Overhead (1.9 hrs. $18.50 per hr.) $20.00 22.80 35.15 $77.95 Total standard cost 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 Bud get (75% Capacity) Variable overhead costs $ 15,000 Indirect materials Indirect labor 75,000 Power 15,000 Repairs and maintenance Total variable overhead costs 30,000 $135,000 Fixed overhead costs Depreciation-Building Depreciation-Machinery 24,000 71,000 16,000 Taxes and insurance Supervision 281,250 Total fixed overhead costs 392,250 $527,250 Total overhead costs The company incurred the following actual costs when it operated at 75% of capacity in October Direct materials (76,000 Ibs. $4.20 per lb.) Direct labor (22,000 hrs. $12.10 per hr.) 319,200 266,200 Overhead costs $ 41,950 176,750 17,250 34,500 24,000 Indirect materials Indirect labor Power Repairs and maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance 95,850 14,400 Supervision 281,250 685,950 $1,271,350 Total costs 4. Compute the direct labor cost variance, including its rate and efficiency variances. AH Actual Hours SH Standard Hours AR Actual Rate SR Standard Rate Actual Cost Standard Cost 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 Variances Flexible Budget Actual Results Fav./Unfav. Variable costs Fixed costs Total overhead costs

Answer 1

	Actual cost								Standard cost
	AH	*	AR		AH	*	SR		SH	*	SR
	22000	*	12.1		22000	*	12		28500	*	12
		266,200		2,200		264000		78000		342000
	Direct labor rate variance				2,200	U
	Direct labor Efficiency variance				78,000	F
	total direct labor variance				75800	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	41,950	26,950	U
Indirect labor			75,000	176,750	101,750	U
Power			15,000	17,250	2,250	U
Repairs & Maintenance			30,000	34,500	4,500	U
total variable costs			135,000	270,450	135,450	U
Fixed costs
Depreciation-Building			24,000	24,000	0	N
Depreciation-Machinery			71,000	95,850	24,850	U
Taxes and insurance			16,000	14,400	1,600	F
Supervision			281,250	281,250	0	N
total fixed costs			392,250	415,500	23,250	U
total overhead costs			527,250	685,950	158,700	U