The predetermined overhead rate ($18.50 per direct labor hour)is based 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 $ 15,000Indirect labor 75,000 Power 15,000 Repairs and maintenance 30,000Total variable overhead costs $ 135,000 Fixed overhead costsDepreciation—Building 25,000 Depreciation—Machinery 70,000 Taxesand insurance 17,000 Supervision 308,000 Total fixed overhead costs420,000 Total overhead costs $ 555,000
The company incurred the following actual costs when it operatedat 75% of capacity in October. Direct materials (46,000 Ibs. @$4.20 per lb.) $ 193,200 Direct labor (22,000 hrs. @ $14.30 perhr.) 314,600 Overhead costs Indirect materials $ 41,900 Indirectlabor 176,650 Power 17,250 Repairs and maintenance 34,500Depreciation—Building 25,000 Depreciation—Machinery 94,500 Taxesand insurance 15,300 Supervision 308,000 713,100 Total costs $1,220,900 rev: 03_28_2018_QC_CS-122864
Required: 1&2. Prepare flexible overhead budgets for Octobershowing the amounts of each variable and fixed cost at the 65%,75%, and 85% capacity levels and classify all items listed in thefixed 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.Requiredinformation [The following information applies to the questionsdisplayed below.] Antuan Company set the following standard costsfor one unit of its product. Direct materials (3.0 Ibs. @ $4.00 perIb.) $ 12.00 Direct labor (2.0 hrs. @ $14.00 per hr.) 28.00Overhead (2.0 hrs. @ $18.50 per hr.) 37.00 Total standard cost $77.00
