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. @ $4.00 per Ib.) | $ | 16.00 |
| Direct labor (1.9 hrs. @ $12.00 per hr.) | | 22.80 |
| Overhead (1.9 hrs. @ $18.50 per hr.) | | 35.15 |
| Total standard cost | $ | 73.95 |
|
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 | | | | | |
| 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 | | | | | |
| Depreciation—Building | | 23,000 | | | |
| Depreciation—Machinery | | 70,000 | | | |
| Taxes and insurance | | 16,000 | | | |
| Supervision | | 283,250 | | | |
| Total fixed overhead costs | | | | | 392,250 |
| Total overhead costs | | | | $ | 527,250 |
|
The company incurred the following actual costs when it operated at75% of capacity in October.
| | | | | |
| Direct materials (61,500 Ibs. @ $4.10 per lb.) | | | | $ | 252,150 |
| Direct labor (22,000 hrs. @ $12.40 per hr.) | | | | | 272,800 |
| Overhead costs | | | | | |
| Indirect materials | $ | 41,250 | | | |
| Indirect labor | | 176,250 | | | |
| Power | | 17,250 | | | |
| Repairs and maintenance | | 34,500 | | | |
| Depreciation—Building | | 23,000 | | | |
| Depreciation—Machinery | | 94,500 | | | |
| Taxes and insurance | | 14,400 | | | |
| Supervision | | 283,250 | | | 684,400 |
| Total costs | | | | $ | 1,209,350 |
|
rev: 03_28_2018_QC_CS-122864
Required:
1&2. Prepare flexible overhead budgets forOctober showing the amounts of each variable and fixed cost at the65%, 75%, and 85% capacity levels and classify all items listed inthe fixed budget as variable or fixed.
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
4. Compute the direct labor cost variance,including its rate and efficiency variances.
AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate
5. Prepare a detailed overhead variance reportthat shows the variances for individual items of overhead.
