Antuan Company set the following standard costs for one unit of Its product Dire

Question

Antuan Company set the following standard costs for one unit of Its product Direct materla's (3.0 lbs. Direct labor (2.0 hrs. $12.0 per hr) Overhead (2.0 hrs. $18.50 per hr.) $4.0 per lb. 12.00 24.00 37.00 Total standard cost $ 73.00 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 Ind rect materia's Ind rect labor Power Repairs and maintenance $ 15,000 75,000 15,000 45,000 Total variable overhead costs $150,000 Fixed overhead costs 23,000 74,000 7,000 291,000 Taxes and Insurance Total fixed overhead costs 405,000 Total overhead costs $555,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46,000 lbs. @ $4.10 per lb.) Direct labor (29,000 hrs. $12.40 per hr) Overhead costs $ 188,600 $ 45.750 177,250 17,250 51,750 23,000 99,900 15,300 291,000 Ind rect materia's Ind rect labor Repairs and maintenance Taxes and insurance 721,200 Total costs $1,269,400

Explanation / Answer

units produced at 75% capacity = 20000 *.75 = 15000

188600-184000

= 4600

price variance = 4600 U

Quantity variance = 4000 U

Total variance = 8600 U

Actual cost Standard cost AQ * AR AQ * SR SQ * SR 46000 4.10 46000 4 (3*15000)= 45000 4 188600 184000 180,000

188600-184000

= 4600

4000

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