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 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.

Answer 1

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	6.00		78,000	90,000	102,000
	Power	1.00		13,000	15,000	17,000
	Repairs and Maintenance	2.00		26,000	30,000	34,000
	Total Variable cost	10.00		130,000	150,000	170,000
	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		18,000	18,000	18,000	18,000
	Supervision		263,250	263,250	263,250	263,250
	Total Fixed cost		377,250	377,250	377,250	377,250
	Total overhead cost			507,250	527,250	547,250