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Antuan Company set the following standard costs for one unit of its product.   

  

  Direct materials ((3.0 Ibs. @ $4.0 per Ib.) $ 12.00
  Direct labor (1.8 hrs. @ $11.0 per hr.)
19.80
  Overhead (1.8 hrs. @ $18.50 per hr.)
33.30
  

  Total standard cost $ 65.10
  


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% 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
25,000


     Depreciation-machinery
71,000


     Taxes and insurance
17,000


     Supervision
251,500


  




     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 (45,500 Ibs. @ $4.20 per lb.)


$ 191,100
  Direct labor (30,000 hrs. @ $11.30 per hr.)



339,000
  Overhead costs




     Indirect materials $ 45,750


     Indirect labor
177,750


     Power
17,250


     Repairs and maintenance
34,500


     Depreciation-building
25,000


     Depreciation-machinery
95,850


     Taxes and insurance
15,300


     Supervision
251,500

662,900
  




  Total costs


$ 1,193,000
  





1&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.

Compute the direct materials cost variance, including its price and quantity variances. (Round actual price to 2 decimal places.)

.

Compute the direct labor cost variance, including its rate and efficiency variances.(Round actual rate to 2 decimal places.)

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9954985

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