Direct materials (3.0 Ibs. $5.00 per Ib. $15.00 Direct labor (1.7 hrs. $11.00 pe

Question

Direct materials (3.0 Ibs. $5.00 per Ib. $15.00 Direct labor (1.7 hrs. $11.00 per hr.) Overhead (1.7 hrs. e $18.50 per hr.) Total standard cost 18.70 31.45 $65.15 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 s 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 17,000 222,750 336, 750 $471,750 Total overhead costs The company incurred the following actual costs when it operated at 75% of capacity in October Direct materials (46,500 Ibs $5.20 per lb.) Direct labor (29,000 hrs. $11.10 per hr.) Overhead costs s 241,800 321,900 Indirect materials Indirect labor Power Repairs and maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervision $41,950 176,950 17,250 34, 500 25,000 97,200 15,300 222,750 630,900 $1,194, 600

Explanation / Answer

ANTUAN COMPANY Flexible Overhead Budgets For Month Ended October 31 Flexible Budget Flexible Budget for Variable Amount per Unit Total Fixed Cost 65% of capacity 75% of capacity 85% of capacity Sales (in units) 13,000 15,000 17,000 Variable costs Indirect materials 1 13,000 15,000 17,000 Indirect labor 5 65,000 75,000 85,000 Power 1 13,000 15,000 17,000 Repairs and maintenance 2 26,000 30,000 34,000 Total variable costs 9 117000 135000 153000 Fixed costs Depreciation—Building 25000 25000 25000 25000 Depreciation—Machinery 72,000 72,000 72,000 72,000 Taxes and insurance 17,000 17,000 17,000 17,000 Supervision 2,22,750 2,22,750 2,22,750 2,22,750 Total fixed costs 336750 336750 336750 336750 Total overhead costs 453750 471750 489750

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