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 materials (3.0 lbs.@ $5.00 per lb) S 15.00 Direct labor (1.8 hrs. $12.00 per hr.) Overhead (1.8 hrs. $18.50 per hr) 21.60 33.30 Total standard cost $ 69.90 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factor's copacity 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 Repoirs and maintenance S 15.000 75,000 15,000 30,000 Total variable overhead costs $ 135,000 Fixed overhead costs Depreciation-building Depreciation machinery Taxes and insurance Supervision 24.000 71,000 18,000 251,500 Total fixed overhead costs 364,500 Total overhead costs $499,500

Explanation / Answer

Flexible overhead budgets

Flexible budget Flexible budget for Variable amount
per unit Total Fixed
Cost 65% of
capacity 75% of
capacity 85% of
capacity Sales (in units) 13000 15000 17000 Variable overhead costs Indirect materials 1.00 13000 15000 17000 Indirect labor 5.00 65000 75000 85000 Power 1.00 13000 15000 17000 Repairs and Maintenance 2.00 26000 30000 34000 Total variable costs 9.00 117000 135000 153000 Fixed overhead costs: Depreciation-Building 24000 24000 24000 24000 Depreciation-Machinery 71000 71000 71000 71000 Taxes and insurance 18000 18000 18000 18000 Supervision 251500 251500 251500 251500 Total fixed costs 364500 364500 364500 364500 Total overhead costs $481500 $499500 $517500

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