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

Question

25.

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.

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

Direct materials (3.0 Ibs. @ $5.00 per Ib.) $ 15.00 Direct labor (1.7 hrs. @ $11.00 per hr.) 18.70 Overhead (1.7 hrs. @ $18.50 per hr.) 31.45 Total standard cost $ 65.15

Explanation / Answer

3. Compute the direct materials cost variance, including its price and quantity variances.

Actual Cost 0 0 Standard Cost AQ AP AQ*AP AQ SP AQ*SP SQ SP SQ*SP 46000 5.20 239200 46000 5 230000 60000 5 300000 $0 $9200 0 $70000 Material price variance $9200 U Material quantity variance $70000 F Material cost variance $60800 F

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