Antuan Company set the following standard costs per unit for its product. Direct materials (4.0 pounds @ $6.00 per pound) Direct labor (1.8 hours @ $11.00 per hour) Overhead (1.8 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% cap 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 Show Transcribed Text Indirect materials Indirect labor Power Maintenance $24.00 19.80 33.30 $77.10 $ 15,000 75,000 15,000 30,000 135,000 25,000 16,000 251,500 364,500 $ 499,500 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,500 pounds @ $6.10 per pound) Direct labor (21,000 hours @ $11.10 per hour) $375,150 233, 100 Overhead costs Depreciation-Building Depreciation Machinery Taxes and insurance Supervisory salaries Total costs $ 41,350 176,700 17,250 34,500 25,000 97,200 14,400 251,500 657,900 $ 1,266,150
Antuan Company set the following standard costs per unit for its product. Direct materials (4.0 pounds @ $6.00 per pound) Direct labor (1.8 hours @ $11.00 per hour) Overhead (1.8 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% cap 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 Show Transcribed Text Indirect materials Indirect labor Power Maintenance $24.00 19.80 33.30 $77.10 $ 15,000 75,000 15,000 30,000 135,000 25,000 16,000 251,500 364,500 $ 499,500 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,500 pounds @ $6.10 per pound) Direct labor (21,000 hours @ $11.10 per hour) $375,150 233, 100 Overhead costs Depreciation-Building Depreciation Machinery Taxes and insurance Supervisory salaries Total costs $ 41,350 176,700 17,250 34,500 25,000 97,200 14,400 251,500 657,900 $ 1,266,150
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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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Question
Subject : Accounting
Transcribed Image Text:2. Compute the direct materials variance, including its price and quantity variances. (Indicate the effect of each variance by selecting
favorable, unfavorable, or no variance.)
Actual quantity
Actual Cost
X
X
Direct materials price variance
Direct materials quantity variance
Direct materials variance
Actual price
0
$
0
Actual quantity
0
O
X
X
Standard price
0
Standard quantity
Standard Cost
X
X
Standard price
Transcribed Image Text:Antuan Company set the following standard costs per unit for its product.
Direct materials (4.0 pounds @ $6.00 per pound)
Direct labor (1.8 hours @ $11.00 per hour)
Overhead (1.8 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.
Variable overhead costs
Overhead Budget (75% Capacity)
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
Show Transcribed Text
Indirect materials
Indirect labor.
Power
Maintenance
Depreciation-Building
Depreciation-Machinery
Taxes and insurance.
Supervisory salaries
Total costs
Show Transcribed Text
$ 15,000
75,000
15,000
30,000
135,000
25,000
72,000
The company incurred the following actual costs when it operated at 75% of capacity in October.
Direct materials (61,500 pounds @ $6.10 per pound)
Direct labor (21,000 hours @ $11.10 per hour)
Overhead costs
$24.00
19.80
33.30
$77.10
16,000
251,500
364,500
$ 499,500
$ 41,350
176,700
17,250
34,500
25,000
97,200
14,400
251,500
$375,150
233, 100
657,900
$ 1,266, 150
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