Antuan Company set the following standard costs per unit for its product. Direct materials (3.0 pounds @ $5.00 per pound) Direct labor (1.7 hours @ $11.00 per hour) Overhead (1.7 hours @ $18.50 per hour) Standard cost per unit The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level 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 Indirect labor Power Maintenance Total variable overhead costs Fixed overhead costs Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total fixed overhead costs Total overhead costs Indirect materials Indirect labor Power Maintenance $ 15,000 75,000 15,000 30,000 135,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46,500 pounds @ $5.20 per pound) Direct labor (22,000 hours @ $11.30 per hour) $ 241,800 248,600 Overhead costs Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries. Total costs $15.00 18.70 31.45 $65.15 25,000 71,000 17,000 223,750 336,750 $ 471,750 $ 41,350 176,000 17,250 34,500 25,000 95,850 15,300 223,750 629,000 $ 1,119,400
Antuan Company set the following standard costs per unit for its product. Direct materials (3.0 pounds @ $5.00 per pound) Direct labor (1.7 hours @ $11.00 per hour) Overhead (1.7 hours @ $18.50 per hour) Standard cost per unit The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level 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 Indirect labor Power Maintenance Total variable overhead costs Fixed overhead costs Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total fixed overhead costs Total overhead costs Indirect materials Indirect labor Power Maintenance $ 15,000 75,000 15,000 30,000 135,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46,500 pounds @ $5.20 per pound) Direct labor (22,000 hours @ $11.30 per hour) $ 241,800 248,600 Overhead costs Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries. Total costs $15.00 18.70 31.45 $65.15 25,000 71,000 17,000 223,750 336,750 $ 471,750 $ 41,350 176,000 17,250 34,500 25,000 95,850 15,300 223,750 629,000 $ 1,119,400
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Antuan Company set the following standard costs per unit for its product.
Direct materials (3.0 pounds @ $5.00 per pound)
Direct labor (1.7 hours @ $11.00 per hour)
Overhead (1.7 hours @ $18.50 per hour)
Standard cost per unit
The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level 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
Indirect labor
Power
Maintenance
Total variable overhead costs
Fixed overhead costs
Depreciation-Building
Depreciation-Machinery
Taxes and insurance
Supervisory salaries
Total fixed overhead costs
Total overhead costs
Indirect materials
Indirect labor
Power
Maintenance
$ 15,000
75,000
15,000
30,000
135,000
Depreciation-Building
Depreciation-Machinery
Taxes and insurance
Supervisory salaries
Total costs
25,000
71,000
The company incurred the following actual costs when it operated at 75% of capacity in October.
Direct materials (46,500 pounds @ $5.20 per pound)
Direct labor (22,000 hours @ $11.30 per hour)
$ 241,800
248,600
Overhead costs
$15.00
18.70
31.45
$ 65.15
17,000
223,750
336,750
$ 471,750
$ 41,350
176,000
17,250
34,500
25,000
95,850
15,300
223,750
629,000
$ 1,119,400
Transcribed Image Text:2. Compute the direct materials variance, including its price and quantity varlances.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance.
Actual Cost
Actual Cost
Expected production volume
Production level achieved
Volume Variance
Variable overhead costs
Fixed overhead costs
Total overhead costs
Volume Variance
0
Volume variance
Total overhead variance
3. Compute the direct labor variance, including its rate and efficiency variances.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Round "Rate per hour" answers to
two decimal places.
$
$
0
0
$
$
%
0
ANTUAN COMPANY
Overhead Variance Report
For Month Ended October 31
$
$
0
$
0
Standard Cost
Flexible Budget Actual Results Variances Favorable or Unfavorable
0
Standard Cost
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