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Problem 08-3A 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. @ $13.00 per hr.)		23.40
Overhead (1.8 hrs. @ $18.50 per hr.)		33.30
Total standard cost	$	76.70

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		17,000
Supervision		251,500
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 (60,500 Ibs. @ $5.10 per lb.)				$	308,550
Direct labor (23,000 hrs. @ $13.20 per hr.)					303,600
Overhead costs
Indirect materials	$	41,000
Indirect labor		176,000
Power		17,250
Repairs and maintenance		34,500
Depreciation—Building		24,000
Depreciation—Machinery		97,200
Taxes and insurance		15,300
Supervision		251,500			656,750
Total costs				$	1,268,900

rev: 04_27_2020_QC_CS-209738

Problem 08-3A Part 5

5. 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.)

Answer 1

Req 5	ANTUAN COMPANY
	Overhead Variance Report
	For Month ended October 31
	Expected Production Volume	75%	of capacity
	Production level achived	75%	of capacity
	Volume Variance	No Variance
		Flexible Budgdte	Actual Results	Variances	Fav/Unfav.
	Variable Cost
	Indirect Material	15,000	41,000	26,000	Unfav.
	Indirect Labor	75,000	176,000	101,000	Unfav.
	Power	15,000	17,250	2,250	Unfav.
	Repairs and Maintenance	30,000	34,500	4,500	Unfav.
	Total Variable cost	135,000	268,750	133,750	Unfav.
	Fixed Cost:
	Deprecition-Building	24,000	24,000	-	No Variance
	Deprecition-Machinery	72,000	97,200	25,200	Unfav.
	Taxes and Insurance	17,000	15,300	1,700	Fav
	Supervision	251,500	251,500	-	No Variance
	Total Fixed cost	364,500	388,000	23,500	Unfav.
	Total overhead cost	499,500	656,750	157,250	Unfav.

Working Notes:

Req 1&2	ANTUAN COMPANY
	Flexible Overhead Budget
	For Month ended October 31
		Flexible Budget	Flexible Budget for
		Variable Amount per Unit	Total Fixed Cost	65%	75%	85%
				of capacity	of capacity	of capacity
	Sales(In Units)			13000	15000	17000
	Variable Cost
	Indirect Material	1.00		13,000	15,000	17,000
	Indirect Labor	5.00		65,000	75,000	85,000
	Power	1.00		13,000	15,000	17,000
	Repairs and Maintenance	2.00		26,000	30,000	34,000
	Total Variable cost	9.00		117,000	135,000	153,000
	Fixed Cost:
	Deprecition-Building		24,000	24,000	24,000	24,000
	Deprecition-Machinery		72,000	72,000	72,000	72,000
	Taxes and Insurance		17,000	17,000	17,000	17,000
	Supervision		251,500	251,500	251,500	251,500
	Total Fixed cost		364,500	364,500	364,500	364,500
	Total overhead cost			481,500	499,500	517,500

Req 3	Actual Cost		Flexible Budget		Standard Cost
	AQ	x	AP		AQ	x	SP		SQ	x	SP
	60,500	x	5.1		60,500	x	5		60,000	x	5
		308,550				302,500				300,000
				6,050				2,500
	Direct material Price Variance		6,050	Unfavourable					ekkarill92 Next > < Previous Related Solutions Problem 08-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report... Problem 08-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report LO P1, P2, P3, P4 Skip to question [The following information applies to the questions displayed below.] 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. @ $13.00 per hr.) 23.40 Overhead (1.8 hrs. @ $18.50 per hr.) 33.30 Total standard cost $ 76.70 The predetermined... Problem 08-3A Flexible budget preparation; computation of materials, labor, and overhead variances; and overhead variance report... 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