Question

Required information (The following information applies to the questions displayed below.) Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs. @ $4.00 per Ib.) Direct labor (1.9 hrs. @ $12.00 per hr.) Overhead (1.9 hrs. @ $18.50 per hr.) Total standard cost $12.00 22.80 35.15 669.95 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 (75Capacity) Variable overhead costs Indirect materials $ 15,000 Indirect labor 75,000 Power 15,000 Repairs and maintenance 30,000 Total variable overhead costs Fixed overhead costs Depreciation-Building 25,000 Depreciation-Machinery 70,000 Taxes and insurance 16,000 Supervision 281,250 Total fixed overhead costs Total overhead coats $135,000 392, 250 6527,250

Answer 1

1 & 2 Flexible Overhead Budget Antuan Company Flexible Overhead Budget For month Ended October 31 Flexible Budget Flexible Budget at Variable cost per Unit Fixed Cost 65% of Capacity| 75% of Capacity 85% of Capacity 13000 15000 17000 $ 13,000 65,000 13,000 26,000 117,000 $ $ $ $ $ 15,000 75,000 15,000 30,000 135,000 $ $ $ $ $ 17,000 85,000 17,000 34,000 153,000 $ Sales in units Variable Cost: Indirect Material Indirect Labor Power Repairs & Maintenance Total Variable Cost Fixed Cost: Depreciation - Building Depreciation - Machinery Taxes and Insurance Supervision Total Fixed Cost Total Overhead Cost $ 25,000 $ 70,000 $ 16,000 $ 281,250 $ 392,250 $ $ $ $ $ 25,000 $ 70,000 $ 16,000 $ 281,250 $ 392,250 $ 509,250 $ 25,000 $ 70,000 $ 16,000 $ 281,250 $ 392,250 $ 527,250 $ 25,000 70,000 16,000 281,250 392,250 545,250 65% of Capacity Variable cost per Unit 75% of Capacity 85% of Capacity 20000*65% 20000*75% 20000*85% Sales in units Variable Cost: Indirect Material Indirect Labor Power Repairs & Maintenance 15000/15000 75000/15000 15000/15000 30000/15000 1 x 13000 5 x 13000 1x 13000 2 x 13000 1x 15000 5 x 15000 1x 15000 2 x 15000 1x 17000 5 x 17000 1 x 17000 12x 17000 Fixed cost remain same at all level of activity.

3.Direct Material cost variance including its price and quantity variance Actual Cost x AQ 45500 Flexible AQ IX 45500 SP AP 4.10 SP 4.00 Standard Cost SQ X 45000 $ $ $ 4.00 $ 186,550 $ 182,000 $ 180,000 $ 4,550 $ 2,000 Price Variance Quantity Variance Total Direct Material cost variance $ $ $ 4,550 2,000 6,550 Unfavorable Unfavorable Unfavorable Standard Quantity=number of units X lbs per unit Here number of units are 15000 units standard Ibs per unit is 3.00 so total standard quantity is 15000 X 3.00=45000 lbs Price variance = actual cost - standard price at actual quantity (flexible cost) Quantity variance = standard price at actual quantity (flexible cost) - Standard price at standard quantity Price variance is favorable when actual cost incurred is less than standard cost at actual hours, and unfavorable when actual cost incurred is more than standard cost at actual Qty. Quanity variance is favorable when actual quantity used is less than budgeted quantity, and unfavorable when actual quantity used is more than budgeted quantty. 4. Direct labor cost variance including its rate and efficiency variance Actual Cost AH 22000 AR X SH AH 22000 SR 12.00 Standard Cost X 28500 SR 12.00 $ 12.20 $ $ | $ 268,400 $ 264,000 $ 342,000 $ 4,400 $ 78,000 Direct Labor rate Variance Direct Labor efficiency Variance Total Direct labor cost variance $ $ $ 4,400 78,000 82,400 Unfavorable favorable favorable Standard hours = number of units X hours per unit Here number of units are 15000 units standard hours per unit is 1.90 so total standard hours is 1500 X 1.90= 28500 hours Rate variance = actual cost - standard rate at actual hours Efficiency variance = standard rate at actual hours - Standard rate at standard hours Rate variance is favourable when actual cost incurred is less than standard cost at actual hours, and unfavourable when actual cost incurred is more than standard cost at actual hours. Efficiency variance is favourable when actual hours used are less than budgeted hours, and unfavourable when actual hours used are more than budgeted hours.

5. Detailed Overhead Variance Report Expected Production Volume Production Level achieved Volume Variance Antuan Company Overhead Variance Report For month Ended October 31 75% of capacity 75% of capacity No Variance Flexible Budget Actual Results Varaince Fav/Unfav $ 15,000 75,000 15,000 30,000 135,000 $ $ $ $ $ 41,750 $ 176,600 $ 17,250 $ 34,500 $ 270,100 $ 26,750 Unfavorable 101,600 Unfavorable 2,250 Unfavorable 4,500 Unfavorable 135,100 (Unfavorable $ Variable Cost: Indirect Material Indirect Labor Power Repairs & Maintenance Total Variable Cost Fixed Cost : Depreciation - Building Depreciation - Machinery Taxes and Insurance Supervision Total Fixed Cost Total Overhead Cost $ $ 25,000 70,000 16,000 281,250 392,250 527,250 $ $ $ $ $ $ 25,000 $ 94,500 $ 14,400 $ 281,250 $ 415,150 $ 685,250 $ - No variance 24,500 Unfavorable 1,600 favorable No variance 22,900 Unfavorable 158,000 Unfavorable