Question

Problem 21-3A 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 24.00 Direct materials (4.0 lbs. $6.00 per tb.) Direct labor (1.7 hrs. $12.00 per hr.) Overhead (1.7 hrs. $18.50 per hr.) Total standard cost foto 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 (753 Capacity) Variable overhead costs Indirect materials $ 15,000 Indirect labor 75,000 15,000 Repairs and maintenance 30,000 Total variable overhead costs Fixed overhead costs Depreciation Building Depreciation Machinery Taxes and insurance Supervision 223,250 Total Fixed overhead costs Total overhead costs The company incurred the following actual costs when it operated at 75% of capacity in October Direct materials (61,000 lbs. 36.20 per lb.) Direct labor (20,000 hrs. $12.0 per hr.) $ 378,200 17,250 Depreciation building Taxes and insurance 95.85 16,200 223,750 629.45 $1,253,650 Total costs Problem 21-3A Part 4 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 Actual Cost Standard Cos S 0

Answer 1

Solution 4:

Direct Labor Cost Variance
Actual Cost				Standard cost for actual quantity				Standard Cost
AQ *	AP =			AQ *	SP =			SQ *	SP =
20000	$12.30	$246,000.00		20000	$12.00	$240,000.00		25500	$12.00	$306,000.00
			$6,000 U				$66,000 F
			Direct Labor rate Variance				Direct Labor Efficiency Variance
Direct Labor Rate variance				$6,000.00	U
Direct Labor Efficiency variance				$66,000.00	F
Direct labor cost variance				$60,000.00	F