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

Question

Antuan Company set the following standard costs for one unit of its product. Direct materials (6 lbs. $5 per lb.) Direct labor (2 hrs. @ $17 per hr) Overhead (2 hrs. @ $18.50 per hr) $ 30 34 37 Total standard cost $ 101 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 Indirect labor Power Repairs and maintenance 45,000 180,000 45,000 90,000 Total variable overhead costs $360,000 Fixed overhead costs Depreciation-building Depreciation-machinery Taxes and insurance Supervision 24,000 80,000 12,000 79,000 Total fixed overhead costs 195,000 Total overhead costs $555,000

Explanation / Answer

Flexible budget

(3)      Actual cost                                                                                                               Standard cost

AQ * AR                                                        AQ * SR                                                  SQ * SR

91,000*$5.10                                              91,000*5                                                90,000* $5

                    $464,100                                             $455,000                                                      $450,000

Material price variance                           9100(U)

Material quantiry varaince                      5000(U)

total material cost variance                   14,100(U)

(4) Direct labor cost variance

AH * AR                                                            AH * SR                                                         SH * SR

30,500*17.25                                                 30,500 * 17                                                   30,000*17

        $526,125                                                  $518,500                                                     $510,000

Direct price variane                                       $7625(U)

Direct labor efficiency variance                     $8500(U)

Direct labor total vairance                            $16,125(U)

Variable cost per unit total fixed cost 65% capacity 75% capacity 85% cpaacity Sales( in units) 13,000 15,000 17,000 variable costs indirect materials 2.25 29,250 33,750 38,250 indirect labor 9.00 117,000 135,000 153,000 power 2.25 29,250 33.750 38,250 Repairs & maintenance 4.50 58,500 67,500 76,500 total vaiable cos t 18.00 234,000 270,000 306,000 fixed costs Depreciation - buidling 24,000 24,000 24,000 24,000 Depreciation - machinery 80,000 80,000 80,000 80,000 Taxes & insurance 12,000 12,000 12,000 12,000 Supervision 79,000 79,000 79,000 79,000 total fixed costs 195,000 195,000 195,000 195,000 total oveheac sots 429,000 465,000 501,000

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