Antuan Company set the following standard costs per unit for its product. Direct materials (4.0 pounds @ $4.00 per pound) Direct labor (1.7 hours @ $12.00 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% capacit 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 24,000 71,000 $ 16.00 20.40 31.45 $ 67.85 17,000 224,750 336,750 $ 471,750 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,500 pounds @ $4.20 per pound) $ 258,300 282,900 Direct labor (23,000 hours @ $12.30 per hour) Overhead costs $ 41,300 176,400 17,250 34,500 24,000 95,850 15,300 224,750 629,350 $ 1,170,550
Antuan Company set the following standard costs per unit for its product. Direct materials (4.0 pounds @ $4.00 per pound) Direct labor (1.7 hours @ $12.00 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% capacit 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 24,000 71,000 $ 16.00 20.40 31.45 $ 67.85 17,000 224,750 336,750 $ 471,750 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,500 pounds @ $4.20 per pound) $ 258,300 282,900 Direct labor (23,000 hours @ $12.30 per hour) Overhead costs $ 41,300 176,400 17,250 34,500 24,000 95,850 15,300 224,750 629,350 $ 1,170,550
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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![Required information
[The following information applies to the questions displayed below.]
Antuan Company set the following standard costs per unit for its product.
Direct materials (4.0 pounds @ $4.00 per pound)
Direct labor (1.7 hours @ $12.00 per hour)
$ 16.00
20.40
31.45
Overhead (1.7 hours @ $18.50 per hour)
Standard cost per unit
$ 67.85
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 (61,500 pounds @ $4.20 per pound)
$ 258,300
282,900
Direct labor (23,000 hours @ $12.30 per hour)
Overhead costs
Depreciation-Building
Depreciation-Machinery
Taxes and insurance
Supervisory salaries
Total costs
24,000
71,000
17,000
224,750
336,750
$ 471,750
$ 41,300
176,400
17,250
34,500
24,000
95,850
15,300
224,750
629,350
$ 1,170,550](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F67c5839d-c687-4c82-bf94-4d75b237f7bf%2F54448eef-2df6-4938-8dca-7c781a6f5475%2Fzjq7ckw_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Antuan Company set the following standard costs per unit for its product.
Direct materials (4.0 pounds @ $4.00 per pound)
Direct labor (1.7 hours @ $12.00 per hour)
$ 16.00
20.40
31.45
Overhead (1.7 hours @ $18.50 per hour)
Standard cost per unit
$ 67.85
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 (61,500 pounds @ $4.20 per pound)
$ 258,300
282,900
Direct labor (23,000 hours @ $12.30 per hour)
Overhead costs
Depreciation-Building
Depreciation-Machinery
Taxes and insurance
Supervisory salaries
Total costs
24,000
71,000
17,000
224,750
336,750
$ 471,750
$ 41,300
176,400
17,250
34,500
24,000
95,850
15,300
224,750
629,350
$ 1,170,550
Transcribed Image Text:3. Compute the direct labor variance, including its rate and efficiency variances. (Indicate the effect of each variance by selecting
favorable, unfavorable, or no variance. Round "Rate per hour answers to two decimal places.)
Actual Cost
Standard Cost
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