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Antuan Company set the following standard costs per unit for its product. $ 15.00 Direct materials (3.0 pounds @ $5.00 per pound) Direct labor (1.8 hours $14.00 per hour) 25.20 33.30 Overhead (1.8 hours @ $18.50 per hour) $ 73.50 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 Ja Fixed overhead costs Depreciation Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total fixed overhead costs Total overhead costs Indirect materials Indirect labor DREA Power Maintenance Depreciation Building The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46,588 pounds @ $5.18 per pound) Direct labor (19,888 hours @ $14.29 per hour) $ 237,150 269, 880 Overhead costs Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 15,800 75,000 15,000 30,000 135,868 24,900 71,900 Actual Cost 18, 860 251, 500 354,500 $ 499, 500 $ 41,788 176, 950 17, 258 34,500 24,860 95, 850 16, 200 251, 500 657,950 $ 1,164,986 Compute the direct labor variance, including its rate and efficiency variances. (Indicate the effect of each variance by selecting vorable, unfavorable, or no variance. Round "Rate per hour" answers to two decimal places.) Standard Cost

Antuan Company set the following standard costs per unit for its product. $ 15.00 Direct materials (3.0 pounds @ $5.00 per pound) Direct labor (1.8 hours $14.00 per hour) 25.20 33.30 Overhead (1.8 hours @ $18.50 per hour) $ 73.50 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 Ja Fixed overhead costs Depreciation Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total fixed overhead costs Total overhead costs Indirect materials Indirect labor DREA Power Maintenance Depreciation Building The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46,588 pounds @ $5.18 per pound) Direct labor (19,888 hours @ $14.29 per hour) $ 237,150 269, 880 Overhead costs Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 15,800 75,000 15,000 30,000 135,868 24,900 71,900 Actual Cost 18, 860 251, 500 354,500 $ 499, 500 $ 41,788 176, 950 17, 258 34,500 24,860 95, 850 16, 200 251, 500 657,950 $ 1,164,986 Compute the direct labor variance, including its rate and efficiency variances. (Indicate the effect of each variance by selecting vorable, unfavorable, or no variance. Round "Rate per hour" answers to two decimal places.) Standard Cost

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Standard Cost Analysis for Antuan Company Product** Antuan Company has established the following standard costs per unit for its product: - **Direct Materials**: - 3.0 pounds @ $5.00 per pound = $15.00 - **Direct Labor**: - 1.8 hours @ $14.00 per hour = $25.20 - **Overhead**: - 1.8 hours @ $18.50 per hour = $33.30 - **Total Standard Cost per Unit**: - $73.50 The overhead rate is calculated based on an expected activity level of 75% factory capacity, equating to 20,000 direct labor hours per month. Below is the budgeted overhead cost per month at this capacity. **Overhead Budget (75% Capacity)** - **Variable Overhead Costs** - Indirect materials: $15,000 - Indirect labor: $75,000 - Power: $15,000 - Maintenance: $18,000 - Total Variable Overhead Costs: $123,000 - **Fixed Overhead Costs** - Depreciation-Building: $24,000 - Depreciation-Machinery: $71,000 - Taxes and insurance: $11,000 - Supervisory salaries: $251,500 - Total Fixed Overhead Costs: $357,500 - **Total Overhead Costs**: $480,500 In October, operations at 75% capacity yielded the following actual costs: - **Direct Materials (46,500 pounds @ $5.10 per pound)**: $237,150 - **Direct Labor (19,000 hours @ $14.20 per hour)**: $269,800 - **Overhead Costs** - Indirect materials: $41,700 - Indirect labor: $176,950 - Power: $17,150 - Maintenance: $34,600 - Depreciation-Building: $24,000 - Depreciation-Machinery: $96,000 - Taxes and insurance: $15,600 - Supervisory salaries: $251,500 - **Total Overhead Costs**: $657,950 - **Total Costs**: $1,164
Transcribed Image Text:**Standard Cost Analysis for Antuan Company Product** Antuan Company has established the following standard costs per unit for its product: - **Direct Materials**: - 3.0 pounds @ $5.00 per pound = $15.00 - **Direct Labor**: - 1.8 hours @ $14.00 per hour = $25.20 - **Overhead**: - 1.8 hours @ $18.50 per hour = $33.30 - **Total Standard Cost per Unit**: - $73.50 The overhead rate is calculated based on an expected activity level of 75% factory capacity, equating to 20,000 direct labor hours per month. Below is the budgeted overhead cost per month at this capacity. **Overhead Budget (75% Capacity)** - **Variable Overhead Costs** - Indirect materials: $15,000 - Indirect labor: $75,000 - Power: $15,000 - Maintenance: $18,000 - Total Variable Overhead Costs: $123,000 - **Fixed Overhead Costs** - Depreciation-Building: $24,000 - Depreciation-Machinery: $71,000 - Taxes and insurance: $11,000 - Supervisory salaries: $251,500 - Total Fixed Overhead Costs: $357,500 - **Total Overhead Costs**: $480,500 In October, operations at 75% capacity yielded the following actual costs: - **Direct Materials (46,500 pounds @ $5.10 per pound)**: $237,150 - **Direct Labor (19,000 hours @ $14.20 per hour)**: $269,800 - **Overhead Costs** - Indirect materials: $41,700 - Indirect labor: $176,950 - Power: $17,150 - Maintenance: $34,600 - Depreciation-Building: $24,000 - Depreciation-Machinery: $96,000 - Taxes and insurance: $15,600 - Supervisory salaries: $251,500 - **Total Overhead Costs**: $657,950 - **Total Costs**: $1,164
Expert Solution
Introduction:

Direct labor variance arises when the standard cost or budgeted cost of labor is different from the actual cost of labor.

If the actual cost if more than the budgeted cost, the results are Unfavorable and if the actual cost if less than the budgeted cost the results are Favorable.

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