Reference no: EM132860627

Question - Antuan Company set the following standard costs for one unit of its product.

Direct materials (4.0 Ibs. @ $4.00 per Ib.) $16.00

Direct labor (1.8 hrs. @ $11.00 per hr.) 19.80

Overhead (1.8 hrs. @ $18.50 per hr.) 33.30

Total standard cost $69.10

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 16,000

Supervision 252,500

Total fixed overhead costs 364,500

Total overhead costs $499,500

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

Direct materials (61,000 Ibs. @ $4.10 per lb.) $250,100

Direct labor (22,000 hrs. @ $11.10 per hr.) 244,200

Overhead costs

Indirect materials$41,400

Indirect labor 176,450

Power 17,250

Repairs and maintenance 34,500

Depreciation-Building 24,000

Depreciation-Machinery 97,200

Taxes and insurance 14,400

Supervision 252,500 657,700

Total costs $1,152,000

Required -

1- Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed.

2- Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed.

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

4- Prepare a detailed overhead variance report that shows the variances for individual items of overhead.