Required information
[The following information applies to the questionsdisplayed below.]
Antuan Company set the following standard costs for one unit of itsproduct.
| | |
| Direct materials (4.0 Ibs. @ $5.00 per Ib.) | $ | 20.00 |
| Directlabor (1.7 hrs. @ $12.00 per hr.) | | 20.40 |
| Overhead(1.7 hrs. @ $18.50 per hr.) | | 31.45 |
| Totalstandard cost | $ | 71.85 |
|
The predetermined overhead rate ($18.50 per direct labor hour) isbased on an expected volume of 75% of the factory’s capacity of20,000 units per month. Following are the company’s budgetedoverhead costs per month at the 75% capacity level.
| Overhead Budget (75% Capacity) |
| Variable overhead costs | | | | | |
| Indirectmaterials | $ | 15,000 | | | |
| Indirectlabor | | 75,000 | | | |
| Power | | 15,000 | | | |
| Repairsand maintenance | | 30,000 | | | |
| Totalvariable overhead costs | | | | $ | 135,000 |
| Fixedoverhead costs | | | | | |
| Depreciation—Building | | 24,000 | | | |
| Depreciation—Machinery | | 70,000 | | | |
| Taxesand insurance | | 17,000 | | | |
| Supervision | | 225,750 | | | |
| Totalfixed overhead costs | | | | | 336,750 |
| Totaloverhead costs | | | | $ | 471,750 |
|
The company incurred the following actual costs when it operated at75% of capacity in October.
| | | | | |
| Direct materials (60,500 Ibs. @ $5.10 per lb.) | | | | $ | 308,550 |
| Directlabor (21,000 hrs. @ $12.20 per hr.) | | | | | 256,200 |
| Overheadcosts | | | | | |
| Indirectmaterials | $ | 41,150 | | | |
| Indirectlabor | | 176,350 | | | |
| Power | | 17,250 | | | |
| Repairsand maintenance | | 34,500 | | | |
| Depreciation—Building | | 24,000 | | | |
| Depreciation—Machinery | | 94,500 | | | |
| Taxesand insurance | | 15,300 | | | |
| Supervision | | 225,750 | | | 628,800 |
| Totalcosts | | | | $ | 1,193,550 |
|
rev:03_28_2018_QC_CS-122864
3. Compute the direct materials cost variance,including its price and quantity variances.
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
