Question

Antuan Company set the following standard costs for one unit of its product. Direct materials (6 lbs. @ $5 per Ib.) Direct labor (2 hrs. $17 per hr.) Overhead (2 hrs. $18.50 per hr.) Total standard cost $ 30 34 37 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 $ 45,000 Indirect labor 180,000 Power 45,000 Repairs and maintenance 90,000 Total variable overhead costs Fixed overhead costs Depreciation Building 24,000 Depreciation-Machinery B0,000 Taxes and insurance 12,000 Supervision 79,000 Total fixed overhead costs Total overhead costs $360,000 195,000 $555,000 The company incurred the following actual costs when it operated at 75% of capacity in October. $ 464,100 526,125 Direct materials (91,000 Ibs. @ $5.10 per lb.) Direct labor (30,500 hrs. @ $17.25 per hr.) Overhead costs Indirect materials Indirect labor Power Repairs and maintenance Depreciation-Building Depreciation Machinery Taxes and insurance Supervision Total costs $ 44,250 177, 750 43,000 96.000 24,000 75.000 11, 500 89.000 560,500 $1,550,725

Answer 1

5
ANTUAN COMPANY
Overhead Variance Report
For Month Ended October 31
Expected production volume	75% of capacity
Production level achieved	75% of capacity
Volume variance	No variance
	Flexible Budget	Actual Results	Variances	Fav. / Unfav.
Variable costs
Indirect materials	45,000	44,250	750	Favorable
Indirect labor	180,000	177,750	2,250	Favorable
Power	45,000	43,000	2,000	Favorable
Repairs and maintenance	90,000	96,000	6,000	Unfavorable
Total variable costs	360000	361000	1,000	Unfavorable
Fixed costs
Depreciation—Building	24,000	24,000	0	No variance
Depreciation—Machinery	80,000	75,000	5,000	Favorable
Taxes and insurance	12,000	11,500	500	Favorable
Supervision	79,000	89,000	10,000	Unfavorable
Total fixed costs	195000	199500	4,500	Unfavorable
Total overhead costs	555000	560500	5,500	Unfavorable