Antuan Company set the following standard costs for one unit of its product. The
ID: 2543947 • Letter: A
Question
Antuan Company set the following standard costs for one unit of its product.
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.
15,000
The company incurred the following actual costs when it operated at 75% of capacity in October.
Required:
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.
3. Compute the direct materials cost variance, including its price and quantity variances.
AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price
4. Compute the direct labor cost variance, including its rate and efficiency variances.
AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate
5. Prepare a detailed overhead variance report that shows the variances for individual items of overhead.
Explanation / Answer
As per policy, only four parts of a question is allowed to answer at a time, so answering 4 parts:
1&2) Flexible Overhead Budgets : Operating capacity 65% 75% 85% Variable overhead costs Ind Materials (at 75%*65/75) 13000 15000 17000 Ind labor 65000 75000 85000 Power 13000 15000 17000 Repair and maint 26000 30000 34000 Total Variable overhead costs 117000 135000 153000 Fixed Overhead Costs: Dep building 24000 24000 24000 Dep machinery 71000 71000 71000 Taxes and Insu 18000 18000 18000 Supervision 196000 196000 196000 Total Fixed Overhead Costs 309000 309000 309000 Total Overhead Costs 426000 444000 462000Related Questions
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