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Problem 21-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, P4

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

Direct materials (4.0 Ibs. @ $5.00 per Ib.)	$	20.00
Direct labor (1.8 hrs. @ $14.00 per hr.)		25.20
Overhead (1.8 hrs. @ $18.50 per hr.)		33.30
Total standard cost	$	78.50

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		70,000
Taxes and insurance		17,000
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 (61,500 Ibs. @ $5.10 per lb.)				$	313,650
Direct labor (20,000 hrs. @ $14.30 per hr.)					286,000
Overhead costs
Indirect materials	$	41,350
Indirect labor		176,350
Power		17,250
Repairs and maintenance		34,500
Depreciation—Building		25,000
Depreciation—Machinery		94,500
Taxes and insurance		15,300
Supervision		252,500			656,750
Total costs				$	1,256,400

rev: 04_27_2020_QC_CS-209738

Problem 21-3A Part 1&2

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 per Unit Total Fixed Cost 65% of capacity 75% of capacity 85% of capacity Sales (in units) Variable overhead costs Fixed overhead costs Total overhead costs

b. 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.)

Prepare a detailed overhead variance report that shows the variances for individual items of overhead. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No variance.)3. Compute the direct labor cost variance, including its rate and efficiency variances. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No variance. Round "Rate per hour" answers to two decimal places.)

	ANTUAN COMPANY Overhead Variance Report For Month Ended October 31 Expected production volume Production level achieved Volume variance Flexible Budget Actual Results Variances Fav. / Unfav. Variable costs Fixed costs Total overhead costs

Answer 1