Question

Problem 8-3A Flexible budget preparation, computation of materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, C2 (The following information applies to the questions displayed below.) Antuan Company set the following standard costs for one unit of its product Direct materials (6 lbs. @ $5 per Ib.) Direct labor (2 hrs. $17 per hr.) Overhead (2 hrs. $18.58 per hr.) Total standard cost 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 capacity level Capacity Overhead Budget variable overhead costs indirect materials indirect laber 5, de Repairs and maintenance Total variable overhead xed overhead cost Depreciation-unding Depreciation-achine taxes and insurance se de 12 3555, une company incurred the following actu costs when it operated at 75% of capacity in October DEL LORER Orection Overhead

Answer 1

			Antuan Company
		Overhead Variance Report
Expected production volume			75% of capacity
production level achieved			75% of capacity
Volume variance			No variance
			Flexible	Actual	Variances	Fav/unfav
			budget	results
Variable Costs
Indirect materials			45,000	44,250	750	F
Indirect labor			180,000	177,750	2,250	F
Power			45,000	43,000	2,000	F
Repairs & Maintenance			90,000	96,000	6,000	U
total variable costs			360,000	361,000	1,000	U
Fixed costs
Depreciation-Building			24,000	24,000	0	N
Depreciation-Machinery			80,000	75,000	5,000	F
Taxes and insurance			12,000	11,500	500	F
Supervision			79,000	89,000	10,000	U
total fixed costs			195,000	199,500	4,500	U
total overhead costs			555,000	560,500	5,500	U
Actual cost								Standard cost
AH	*	AR		AH	*	SR		SH	*	SR
30500	*	17.25		30500	*	17		30000	*	17
	526,125				518500				510000
			7,625				8500
Direct labor rate variance				7,625	U
Direct labor Efficiency variance				8,500	U
total direct labor variance				16,125	U