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

Direct materials (4.0 Ibs. @ $5.00 per Ib.)	$	20.00
Direct labor (1.7 hrs. @ $13.00 per hr.)		22.10
Overhead (1.7 hrs. @ $18.50 per hr.)		31.45
Total standard cost	$	73.55

The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factorys capacity of 20,000 units per month. Following are the companys 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
Depreciationbuilding		24,000
Depreciationmachinery		72,000
Taxes and insurance		16,000
Supervision		224,750
Total fixed overhead costs					336,750
Total overhead costs				$	471,750

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

Direct materials (61,000 Ibs. @ $5.10 per lb.)				$	311,100
Direct labor (29,000 hrs. @ $13.20 per hr.)					382,800
Overhead costs
Indirect materials	$	41,000
Indirect labor		176,050
Power		17,250
Repairs and maintenance		34,500
Depreciationbuilding		24,000
Depreciationmachinery		97,200
Taxes and insurance		14,400
Supervision		224,750			629,150
Total costs				$	1,323,050
1. 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. 2. Compute the direct materials cost variance, including its price and quantity variances. 3. Compute the direct labor cost variance, including its rate and efficiency variances. 4. Prepare a detailed overhead variance report that shows the variances for individual items of overhead.

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