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 @ $13.00 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 naterials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 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 (45,500 pounds @ 15.20 per pound). Direct labor (21,000 hours @ $13.30 per hour) Overhead costs Actual Cost 24,000 71,000 $ 10,000 223,750 335,750 $ 471, 750 $15.00 22.10 31.45 $48.55 0 2. Compute the direct materials variance, including its price and quantity variances. (Indicate the effect of each variance by selecting avorable, unfavorable, or no variance.) 1 $42,000 370, 300 17,250 34,540 24,000 95, 850 26, 200 223, 750 S 241,00 279, 300 0 0 629, 850 $1,350, 050 S Standard Cost
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 @ $13.00 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 naterials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 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 (45,500 pounds @ 15.20 per pound). Direct labor (21,000 hours @ $13.30 per hour) Overhead costs Actual Cost 24,000 71,000 $ 10,000 223,750 335,750 $ 471, 750 $15.00 22.10 31.45 $48.55 0 2. Compute the direct materials variance, including its price and quantity variances. (Indicate the effect of each variance by selecting avorable, unfavorable, or no variance.) 1 $42,000 370, 300 17,250 34,540 24,000 95, 850 26, 200 223, 750 S 241,00 279, 300 0 0 629, 850 $1,350, 050 S Standard Cost
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter9: Standard Costing: A Functional-based Control Approach
Section: Chapter Questions
Problem 33P: Business Specialty, Inc., manufactures two staplers: small and regular. The standard quantities of...
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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 @ $132.00 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 naterials
Indirect labor
Bo
Power
Maintenance
Depreciation Building
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 (21,000 hours @ $13.30 per hour
s 241, 0
279, 300
Overhead costs
Depreciation-Machinery
Taxes and insurance
Supervisory salaries
Total costs
$ 15,000
75,000
15,000
30,000
135,000
Actual Cost
24,000
71,000
18,000
223,750
336,750
5.473, 750
$
$15.00
22.10
31.45
$68.55
2. Compute the direct materials variance, including its price and quantity vanances, (Indicate the effect of each variance by selecting
favorable, unfavorable, or no variance.)
0
$
42,000
170, 300
17,290
24.540
24,000
95, 850
16, 200
223, 750
629,850
$1,150,00
$
16
Standard Cost
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