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. @ $6.00 per Ib.)	$	18.00
Direct labor (2.0 hrs. @ $10.00 per hr.)		20.00
Overhead (2.0 hrs. @ $18.50 per hr.)		37.00
Total standard cost	$	75.00

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	$	15,000
Indirect labor		75,000
Power		15,000
Repairs and maintenance		30,000
Total variable overhead costs				$	135,000
Fixed overhead costs
Depreciation—Building		24,000
Depreciation—Machinery		72,000
Taxes and insurance		17,000
Supervision		307,000
Total fixed overhead costs					420,000
Total overhead costs				$	555,000

The company incurred the following actual costs when it operated at 75% of capacity in October.

Direct materials (45,500 Ibs. @ $6.20 per lb.)				$	282,100
Direct labor (21,000 hrs. @ $10.20 per hr.)					214,200
Overhead costs
Indirect materials	$	41,950
Indirect labor		176,850
Power		17,250
Repairs and maintenance		34,500
Depreciation—Building		24,000
Depreciation—Machinery		97,200
Taxes and insurance		15,300
Supervision		307,000			714,050
Total costs				$	1,210,350

rev: 03_28_2018_QC_CS-122864

3. Compute the direct materials cost variance, including its price and quantity variances.

AQ = Actual Quantity
SQ = Standard Quantity
AP = Actual Price
SP = Standard Price

4. Compute the direct labor cost variance, including its rate and efficiency variances.

AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate

Answer 1

Actual cost								Standard cost
AQ	*	AP		AQ	*	SR		SQ	*	SR
45500	*	6.2		45500	*	6		45000	*	6
	282,100				273000				270000
			9,100				3000
direct materials price variance				9,100	U
direct materials quantity variance				3,000	U
total direct materials variance				12,100	U

Actual cost								Standard cost
AH	*	AR		AH	*	SR		SH	*	SR
21000	*	10.2		21000	*	10		30000	*	10
	214,200				210000				300000
			4,200				90000
Direct labor rate variance				4,200	U
Direct labor Efficiency variance				90,000	F
total direct labor variance				85,800	F