Question

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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 (1.9 hrs. @ $12.00 per hr.)		22.80
Overhead (1.9 hrs. @ $18.50 per hr.)		35.15
Total standard cost	$	73.95

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 (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		25,000
Depreciation—Machinery		72,000
Taxes and insurance		17,000
Supervision		278,250
Total fixed overhead costs					392,250
Total overhead costs				$	527,250

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

Direct materials (61,500 Ibs. @ $4.20 per lb.)				$	258,300
Direct labor (19,000 hrs. @ $12.40 per hr.)					235,600
Overhead costs
Indirect materials	$	41,100
Indirect labor		176,350
Power		17,250
Repairs and maintenance		34,500
Depreciation—Building		25,000
Depreciation—Machinery		97,200
Taxes and insurance		15,300
Supervision		278,250			684,950
Total costs				$	1,178,850

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

	Actual Cost 0 0 Standard Cost 0 $0 0 $0 $0 0

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 0 0 Standard Cost $0 0 $0 $0 0

ANTUAN COMPANYOverhead Variance ReportFor Month Ended October 31Expected production volumeProduction level achievedVolume varianceFlexible BudgetActual ResultsVariancesFav. / Unfav.Variable costsFixed costsTotal overhead costs

Answer 1

3
Actual Cost								Standard Cost
AQ	x	AP		AQ	x	SP		SQ	x	SP
61,500	x	4.20		61,500	x	$4.00		60,000	x	$4.00
	258300				246000				240000
			12300				6000
Direct materials price variance				12300	Unfavorable
Direct materials quantity variance				6000	Unfavorable
Total direct materials variance				18300	Unfavorable
4
Actual Cost								Standard Cost
AH	x	AR		AH	x	SR		SH	x	SR
19,000	x	$12.40		19,000	x	$12.00		28,500	x	$12.00
	235600				228000				342000
			7600				114000
Direct labor rate variance				7600	Unfavorable
Direct labor efficiency variance				114000	Favorable
Total direct labor variance				106400	Favorable

5
ANTUAN COMPANY
Overhead Variance Report
For Month Ended October 31
Expected production volume	75% of capacity
Production level achieved	75% of capacity
Volume variance	No variance
	Flexible Budget	Actual Results	Variances	Fav. / Unfav.
Variable costs
Indirect materials	15,000	41,100	26,100	Unfavorable
Indirect labor	75,000	176,350	101,350	Unfavorable
Power	15,000	17,250	2,250	Unfavorable
Repairs and maintenance	30,000	34,500	4,500	Unfavorable
Total variable costs	135000	269200	134,200	Unfavorable
Fixed costs
Depreciation—Building	25,000	25,000	0	No variance
Depreciation—Machinery	72,000	97,200	25,200	Unfavorable
Taxes and insurance	17,000	15,300	1,700	Favorable
Supervision	278,250	278,250	0	No variance
Total fixed costs	392250	415750	23,500	Unfavorable
Total overhead costs	527250	684950	157,700	Unfavorable