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[The following information applies to the questions displayed below.] Antuan Company set the following standard costs per unit for its product.
Direct materials (6 pounds @ $5 per pound)
$ 30
Direct labor (2 hours @ $17 per hour)
34
Overhead (2 hours @ $18.50 per hour)
37
Standard cost per unit
$ 101
The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level 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
$ 45,000
Indirect labor
180,000
Power
45,000
Maintenance
90,000
Total variable overhead costs
360,000
Fixed overhead costs
DepreciationBuilding
24,000
DepreciationMachinery
80,000
Taxes and insurance
12,000
Supervisory salaries
79,000
Total fixed overhead costs
195,000
Total overhead costs
$ 555,000
The company incurred the following actual costs when it operated at 75% of capacity in October.
Direct materials (91,000 pounds @ $5.10 per pound)
$ 464,100
Direct labor (30,500 hours @ $17.25 per hour)
526,125
Overhead costs
Indirect materials
$ 44,250
Indirect labor
177,750
Power
43,000
Maintenance
96,000
DepreciationBuilding
24,000
DepreciationMachinery
75,000
Taxes and insurance
11,500
Supervisory salaries
89,000
560,500
Total costs
$ 1,550,725
Required:1. Prepare flexible overhead budgets for October showing amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels.
ANTUAN COMPANY
Flexible Overhead Budgets
For Month Ended October 31
Variable Amount per Unit
Total Fixed Cost
Flexible Budget at Capacity Level of
65%
75%
85%
Production (in units)
13,000
15,000
17,000
Variable overhead costs
Indirect materials
$2
Indirect labor
2
Power
2
Maintenance
2
$8
$0
$0
$0
Fixed overhead costs
DepreciationBuilding
$2
DepreciationMachinery
2
Taxes and insurance
2
Supervisory salaries
2
Total fixed overhead
$0
$0
$0
$0
Total overhead costs
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