Question

Part 2 of 4 Required information (The following information applies to the questions displayed below Antuan Company set the following standard costs for one unit of its product points Direct materials (6 lbs. $5 per a Ib.) Direct labor (2 hrs. @ $17 per hr.) Overhead (2 hrs. $18.50 per hr.) Total standard cost 34 37 $101 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory's capacity of 20000 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 $ 45,000 Indirect labor 180,000 Power 45,000 Repairs and maintenance 90,000 Total variable overhead costs Fixed overhead costs Depreciation Building 24.ee Depreciation Machinery 80,000 Taxes and insurance 12.000 Supervision 79,000 Total fixed overhead costs Total overhead costs $360,000 195,000 $555,000

Answer 1

Ans.	Actual volume on 75% capacity = 20,000 * 75%
	15,000 units
	*Standard quantity (SQ)   =   Actual output * Materials quantity per unit of output
	15,000 units * 6 Ibs.
	90,000	Ibs.
	Actual Cost		Actual quantity at Standard price		Standard Cost
	Actual quantity * Actual price		Actual quantity * Standard price		Standard quantity * Standard price
	91,000 * $5.10		91,000 * $5		90,000 * $5.00
	$464,100		$455,000		$450,000
		-$9,100		-$5,000
	Materials price variance	-$9,100	or   $9,100 Unfavorable
	Materials quantiy variance	-$5,000	or   $5,000 Unfavorable
	Total Materials Variance	-$14,100	or   $14,100 Unfavorable
	*Materials price variance = Actual quantity at standard price - Actual cost
	*Materials quantity variance = Standard cost - Actual quantity at standard price
	*If the standard cost, price and quantity are higher than the actual it means the variance is favorable.
	*If the standard cost, price and quantity are lower than the actual it means the variance is unfavorable.