Reference no: EM132860627
Question - Antuan Company set the following standard costs for one unit of its product.
Direct materials (4.0 Ibs. @ $4.00 per Ib.) $16.00
Direct labor (1.8 hrs. @ $11.00 per hr.) 19.80
Overhead (1.8 hrs. @ $18.50 per hr.) 33.30
Total standard cost $69.10
The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume 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
Repairs and 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
Supervision 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 (61,000 Ibs. @ $4.10 per lb.) $250,100
Direct labor (22,000 hrs. @ $11.10 per hr.) 244,200
Overhead costs
Indirect materials$41,400
Indirect labor 176,450
Power 17,250
Repairs and maintenance 34,500
Depreciation-Building 24,000
Depreciation-Machinery 97,200
Taxes and insurance 14,400
Supervision 252,500 657,700
Total costs $1,152,000
Required -
1- Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed.
2- Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed.
3- Compute the direct labor cost variance, including its rate and efficiency variances.
4- Prepare a detailed overhead variance report that shows the variances for individual items of overhead.