Question

Required information (The following information applies to the questions displayed below.] Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs. @ $5.00 per Ib.) Direct labor (2.0 hrs. @ $10.00 per hr.) Overhead (2.0 hrs. @ $18.50 per hr.) Total standard cost $15.00 20.00 37.00 $72.00 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 Fixed overhead costs Depreciation-Building 23,000 Depreciation-Machinery 70,000 Taxes and insurance 18,000 Supervision 309,000 Total fixed overhead costs Total overhead costs $135,000 420,000 $555,000 The company incurred the following actual costs when it operated at 75% of capacity in October. $ 234,600 206,000 Direct materials (46,000 Ibs. @ $5.10 per lb.) Direct labor (20,000 hrs. @ $10.30 per hr.) Overhead costs Indirect materials Indirect labor Power Repairs and maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervision Total costs $ 41,050 176,900 17, 250 34,500 23,000 94,500 16,200 309,000 712,400 $1,153,000

Answer 1

1.&2.

ANTUAN COMPANY
Flexible Overhead Budgets
For Month Ended October 31
	Flexible Budget		Flexible Budget for
	Variable Amount	Total Fixed	65% of	75% of	85% of
	per unit	Cost	capacity	capacity	capacity
Sales (in units)			13000	15000	17000
Variable overhead costs
Indirect materials	$                       1.00		13000	15000	17000
Indirect labor	$                       5.00		65000	75000	85000
Power	$                       1.00		13000	15000	17000
Repairs and maintenance	$                       2.00		26000	30000	34000
Total variable overhead costs	$                       9.00		117000	135000	153000
Fixed overhead costs
Depreciation-building		23000	23000	23000	23000
Depreciation-machinery		70000	70000	70000	70000
Taxes and insurance		18000	18000	18000	18000
Supervision		309000	309000	309000	309000
Total fixed overhead costs		420000	420000	420000	420000
Total overhead costs			537000	555000	573000

3.

Actual Cost								Standard Cost
AQ	x	AP		AQ	x	SP		SQ	x	SP
46000	x	5.10		46000	x	5.00		45000	x	5.00
			234600				230000				225000
Direct materials price variance				4600	Unfavorable
Direct materials quantity variance				5000	Unfavorable
Direct materials cost variance				9600	Unfavorable

4.

Actual Cost								Standard Cost
AH	x	AR		AH	x	SR		SH	x	SR
20000	x	10.30		20000	x	10.00		30000	x	10.00
			206000				200000				300000
Direct labor rate variance				6000	Unfavorable
Direct labor efficiency variance				100000	Favorable
Direct labor cost variance				94000	Favorable

5.

ANTUAN COMPANY
Overhead Variance Report
For Month Ended October 31
Expected production volume	15000
Production level achieved	15000
Volume variance	0
	Flexible Budget	Actual Results	Variances	Fav./Unfav.
Variable costs
Indirect materials	15000	41050	26050	Unfav.
Indirect labor	75000	176900	101900	Unfav.
Power	15000	17250	2250	Unfav.
Repairs and maintenance	30000	34500	4500	Unfav.
Total variable overhead costs	135000	269700	134700	Unfav.
Fixed costs
Depreciation-building	23000	23000	0	-
Depreciation-machinery	70000	94500	24500	Unfav.
Taxes and insurance	18000	16200	1800	Fav.
Supervision	309000	309000	0	-
Total fixed overhead costs	420000	442700	22700	Unfav.
Total overhead costs	555000	712400	157400	Unfav.