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 (4.0 Ibs.$5.00 per Ib.) Direct labor (1.7 hrs. $13.00 per hr.) Overhead (1.7 hrs.@$18.50 per hr.) Total standard cost $20.00 22.10 31.45 $73.55 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 Indirect labor Power Repairs and maintenance Total variable overhead costs $. 15,000 75,000 15,000 30,000 $135,000 Fixed overhead costs Depreciation-Building Depreciation-Machinery Taxes and insurance Supervision Total fixed overhead costs 25,000 72,000 16,000 223,750 336,750 $471,750 Total overhead costs

Explanation / Answer

Total Capacity 20000 Actual Cap 75% Units Produced 15000 Computation of Direct Labor Variances: Actual Cost Revised Standard Cost for Actual Standard Cost 28000 13.3 372400 25500 13.00 331500 1.70 13.00 22.10 372400 331500 Total Direct Labor Cost Variance -40900 Adverse Direct Labor Rate Variance: (SR-AR)*AH (13-13.30)*28000 -8400 Adverse Direct Labor Efficency Variance: (SH-AH)*SR (25500-28000)*13 -32500 Adverse

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