Antuan Company set the following standard costs for one unit of Its product Dire

Question

Antuan Company set the following standard costs for one unit of Its product Direct materla's (3.0 lbs. Direct labor (2.0 hrs. $12.0 per hr) Overhead (2.0 hrs. $18.50 per hr.) $4.0 per lb. 12.00 24.00 37.00 Total standard cost $ 73.00 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. Overhead Budget (75% Capacity) Variable overhead costs Ind rect materia's Ind rect labor Power Repairs and maintenance $ 15,000 75,000 15,000 45,000 Total variable overhead costs $150,000 Fixed overhead costs 23,000 74,000 7,000 291,000 Taxes and Insurance Total fixed overhead costs 405,000 Total overhead costs $555,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46,000 lbs. @ $4.10 per lb.) Direct labor (29,000 hrs. $12.40 per hr) Overhead costs $ 188,600 $ 45.750 177,250 17,250 51,750 23,000 99,900 15,300 291,000 Ind rect materia's Ind rect labor Repairs and maintenance Taxes and insurance 721,200 Total costs $1,269,400

Explanation / Answer

Particulars Variable Amount Per Unit Cost 65% of Capacity 75% of Capacity 85% of Capacity Sales in (Units) 13000 15000 17000 Variable Costs Direct Material 6lbs@ $5 per lbs 30 390000 450000 510000 Direct Labour 2hours@ $17 per hour 34 442000 510000 578000 Variable Overheads Indirect Material: 45000/(20000*75%) 3 24000 39000 45000 51000 Indirect Labour: 180000/15000 12 80000 156000 180000 204000 Power : 45000/15000 3 12000 39000 45000 0 Repair & Maintenance: 90000/15000 6 79000 78000 90000 3060000 TOTAL VARIAB;E COST 88 1144000 1320000 4403000 FIXED Overhead costs Depreciation Building 24000 24000 24000 24000 Depreciation-machinery 80000 80000 80000 80000 Taxes & Insurance 12000 12000 12000 12000 Supervision 79000 79000 79000 79000

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