Question

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. @ $6.00 per Ib.) $ 24.00 Direct labor (1.9 hrs. @ $13.00 per hr.) 24.70 Overhead (1.9 hrs. @ $18.50 per hr.) 35.15 Total standard cost $ 83.85 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 90,000 Power 15,000 Repairs and maintenance 30,000 Total variable overhead costs $ 150,000 Fixed overhead costs Depreciation—Building 24,000 Depreciation—Machinery 72,000 Taxes and insurance 18,000 Supervision 263,250 Total fixed overhead costs 377,250 Total overhead costs $ 527,250 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,000 Ibs. @ $6.20 per lb.) $ 378,200 Direct labor (22,000 hrs. @ $13.10 per hr.) 288,200 Overhead costs Indirect materials $ 41,050 Indirect labor 176,800 Power 17,250 Repairs and maintenance 34,500 Depreciation—Building 24,000 Depreciation—Machinery 97,200 Taxes and insurance 16,200 Supervision 263,250 670,250 Total costs $ 1,336,650 rev: 04_27_2020_QC_CS-209738 Problem 08-3A

Part 3 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.)

Problem 08-3A Part 4

4. 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.

Answer 1

Req 3	Actual Cost		Flexible Budget		Standard Cost
	AQ	x	AP		AQ	x	SP		SQ	x	SP
	61,000	x	6.2		61,000	x	6		60,000	x	6
		378,200				366,000				360,000
				12,200				6,000
	Direct material Price Variance		12,200	Unfavourable
	Direct material Quantity Variance	6,000	Unfavourable
	Total material variance		18,200	Unfavourable
Req 4	Actual Cost		Flexible Budget		Standard Cost
	AH	x	AR		AH	x	SR		SH	x	SR
	22000	x	13.1		22000	x	13		28500	x	13
		288200				286000				370500
				2,200				84,500
	Direct labor rate Variance		2,200	Unfavourable
	Direct labor efficiency Variance	84,500	Favorable
	Total labor variance		82,300	Favorable