Reference no: EM133118011
Question - Antuan Company set the following standard costs per unit for its product.
Direct materials (3.0 pounds @ $5.00 per pound) $15.00
Direct labor (1.8 hours @ $14.00 per hour) 25.20
Overhead (1.8 hours @ $18.50 per hour) 33.30
Standard cost per unit $73.50
The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's capacity of 20,000 units per month. Following are the company's 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
Maintenance 30,000
Total variable overhead costs 135,000
Fixed overhead costs
Depreciation-Building 24,000
Depreciation-Machinery 72,000
Taxes and insurance 16,000
Supervisory salaries 252,500
Total fixed overhead costs 364,500
Total overhead costs $499,500
The company incurred the following actual costs when it operated at 75% of capacity in October.
Direct materials (46,500 pounds @ $5.10 per pound) $237,150
Direct labor (19,000 hours @ $14.30 per hour) 271,700
Overhead costs
Indirect materials $41,550
Indirect labor 176,900
Power 17,250
Maintenance 34,500
Depreciation-Building 24,000
Depreciation-Machinery 97,200
Taxes and insurance 14,400
Supervisory salaries 252,500 658,300
Total costs $1,167,150
Required -
1. Compute the direct materials variance, including its price and quantity variances. (Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.)
2. Compute the direct labor variance, including its rate and efficiency variance.
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: Direct materials (46,500 pounds @ $5.10 per pound) $237,150. Compute the direct materials variance, including its price and quantity variances
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