The predetermined overhead rate ($18.50 per direct labor hour) is based on an ex

Question

  

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% level.

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.

Compute the direct materials cost variance, including its price and quantity variances. (Round actual price to 2 decimal places.)

Compute the direct labor cost variance, including its rate and efficiency variances.(Round actual rate to 2 decimal places.)

5.

Prepare a detailed overhead variance report that shows the variances for individual items of overhead.

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.

Compute the direct materials cost variance, including its price and quantity variances. (Round actual price to 2 decimal places.)

Compute the direct labor cost variance, including its rate and efficiency variances.(Round actual rate to 2 decimal places.)

5.

Prepare a detailed overhead variance report that shows the variances for individual items of overhead.

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

Explanation / Answer

Solution:

65% 75% 85% Per Unit Total Per Unit Total Per Unit Total Units 13,000 15,000 17,000 Direct Material 30 390,000 30 450,000 30 510,000 Direct Labor         20.90 271,700 20.90 313,500 20.90 355,300 Overhead 35 456,950 35 527,250 35 597,550 Variable overhead cost Indirect material 1 13,000 1 15,000 1 17,000 Indirect Labor 5 65,000 5 75,000 5 85,000 Power 1 13,000 1 15,000 1 17,000 Repairs and Maintenance                 2                26,000                 2                30,000                 2                34,000 Fixed overhead Costs Depreciation - building                24,000                24,000                24,000 Depreciation - machinery                73,000                73,000                73,000 Taxes and insurance                18,000                18,000                18,000 Supervision              277,250              277,250              277,250 Total Cost          1,627,900          1,818,000          2,008,100

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