Question

HOW DO I CALCULATE?

Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs. @ $6.00 per Ib.) Direct labor (1.6 hrs. @ $13.00 per hr.) Overhead (1.6 hrs. @ $18.50 per hr.) Total standard cost $18.00 20.80 29.60 $68.40 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 23,000 Depreciation-Machinery 70,000 Taxes and insurance 17,000 Supervision 199,000 Total fixed overhead costs Total overhead costs $135,000 309,000 $444,000 The company incurred the following actual costs when it operated at 75% of capacity in October. $ 285,200 275, 100 Direct materials (46,000 Ibs. @ $6.20 per lb.) Direct labor (21,000 hrs. @ $13.10 per hr.) Overhead costs Indirect materials Indirect labor Power Repairs and maintenance Depreciation-Building Depreciation Machinery Taxes and insurance Supervision Total costs $ 41,700 176,900 17,250 34,500 23,000 94,500 15, 300 199,000 602,150 $1,162,450

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	15,000	41,700	26,700	Unfavorable
Indirect labor	75,000	176,900	101,900	Unfavorable
Power	15,000	17,250	2,250	Unfavorable
Repairs and maintenance	30,000	34,500	4,500	Unfavorable
Total variable costs	135000	270350	135,350	Unfavorable
Fixed costs
Depreciation—Building	23,000	23,000	0	No variance
Depreciation—Machinery	70,000	94,500	24,500	Unfavorable
Taxes and insurance	17,000	15,300	1,700	Favorable
Supervision	199,000	199,000	0	No variance
Total fixed costs	309000	331800	22,800	Unfavorable
Total overhead costs	444000	602150	158,150	Unfavorable