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Homework answers / question archive / Antuan Company set the following standard costs for one unit of its product

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

Accounting

Antuan Company set the following standard costs for one unit of its product. Direct materials (4.0 Ibs. @ $6.00 per Ib.) Direct labor (1.8 hrs. @ $12.00 per hr.) Overhead (1.8 hrs. @ $18.50 per hr.) Total standard cost $24.00 21.60 33.30 $ 78.90 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 Fixed overhead costs Depreciation-Building 24,000 Depreciation–Machinery 72,000 Taxes and insurance 17,000 Supervision 251,500 Total fixed overhead costs $135,000 364,500 $499,500 Total overhead costs
The company incurred the following actual costs when it operated at 75% of capacity in October. $ 378, 200 270,600 Direct materials (61,000 Ibs. @ $6.20 per lb.) Direct labor (22,000 hrs. @ $12.30 per hr.) Overhead costs Indirect materials Indirect labor Power Repairs and maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervision Total costs $ 41,350 176,600 17,250 34,500 24,000 97,200 15,300 251,500 657,700 $1,306,500
Required: 1&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. ANTUAN COMPANY Flexible Overhead Budgets For Month Ended October 31 Flexible Budget Flexible Budget for Variable Amount Total Fixed 65% of 75% of 85% of per Unit Cost capacity capacity capacity Sales (in units) Variable overhead costs Fixed overhead costs Total overhead costs
3. Compute the direct materials cost variance, including its price and quantity variances. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No variance.) Actual Cost Standard Cost

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ANTUAN COMPANY
Flexible Overhead Budgets
For Month Ended October 31
  Flexible Budget Flexible Budget for
  Variable Amount per Unit Total Fixed Cost 65% of capacity 75% of capacity 85% of capacity
Sales (in units)     (20000*65%)= 13000 (20000*75%)= 15000 (20000*85%)= 17000
Variable overhead costs          
Indirect materials (15000/15000)= 1.00   (13000*$1.00)= 13000 (15000*$1.00)= 15000 (17000*$1.00)= 17000
Indirect labor (75000/15000)= 5.00   (13000*$5.00)= 65000 (15000*$5.00)= 75000 (17000*$5.00)= 85000
Power (15000/15000)= 1.00   (13000*$1.00)= 13000 (15000*$1.00)= 15000 (17000*$1.00)= 17000
Repairs and maintenance (30000/15000)= 2.00   (13000*$2.00)= 26000 (15000*$2.00)= 30000 (17000*$2.00)= 34000
           
Total variable overhead costs $9.00   $117000 $135000 $153000
Fixed overhead costs          
Depreciation—Building   24000 24000 24000 24000
Depreciation—Machinery   72000 72000 72000 72000
Taxes and insurance   17000 17000 17000 17000
Supervision   251500 251500 251500 251500
           
Total fixed overhead costs   $364500 $364500 $364500 $364500
Total overhead costs     $481500 $499500 $517500

3)

Actual Cost       Standard Cost
AQ * AP AQ * SP SQ * SP
61000 * $6.20 61000 * $6.00 60000 * $6.00
  $378200     $366000     $360000  
  $12200   $6000  
 
Direct materials price variance $12200 Unfavorable  
Direct materials quantity variance $6000 Unfavorable
Total direct materials variance $18200 Unfavorable

Standard quantity= 20000*75%*4= 60000