Overhead (2 hours @ $18.50 per hour) Standard cost per unit 37 $ 101 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials $ 45,000 180,000 Indirect labor Power 45,000 Maintenance 90,000 360,000 Total variable overhead costs Fixed overhead costs 24,000 Depreciation-Building Depreciation-Machinery Taxes and insurance 80,000 12,000
Overhead (2 hours @ $18.50 per hour) Standard cost per unit 37 $ 101 The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at level. Overhead Budget (75% Capacity) Variable overhead costs Indirect materials $ 45,000 180,000 Indirect labor Power 45,000 Maintenance 90,000 360,000 Total variable overhead costs Fixed overhead costs 24,000 Depreciation-Building Depreciation-Machinery Taxes and insurance 80,000 12,000
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter10: Standard Costing And Variance Analysis
Section: Chapter Questions
Problem 72P: Moleno Company produces a single product and uses a standard cost system. The normal production...
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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
![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 Cost
0
0
$
0
0
0
$
$
Standard Cost](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0ece9d0d-a73d-49df-8564-6baad6491ed6%2Fa9a3a1e0-0c2f-4a8a-9008-c6feaf0cd209%2Fbcjg7t7_processed.png&w=3840&q=75)
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 Cost
0
0
$
0
0
0
$
$
Standard Cost
![Antuan Company set the following standard costs per unit for its product.
Direct materials (6 pounds @ $5 per pound)
$ 30
Direct labor (2 hours @ $17 per hour)
34
Overhead (2 hours @ $18.50 per hour).
37
Standard cost per unit
$ 101
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.
$ 45,000
Indirect labor
180,000
Power
45,000
Maintenance
90,000
360,000
Total variable overhead costs
Fixed overhead costs
24,000
Depreciation-Building
Depreciation-Machinery
80,000
Taxes and insurance
12,000
Supervisory salaries.
79,000
Total fixed overhead costs
195,000
Total overhead costs
$ 555,000
The company incurred the following actual costs when it operated at 75% of capacity in October.
Direct materials (91,000 pounds @ $5.10 per pound)
$ 464,100
526,125
Direct labor (30,500 hours @ $17.25 per hour)
Overhead costs
Indirect materials
$ 44,250
Indirect labor
177,750
Power
43,000
Maintenance
96,000
24,000
Depreciation-Building
Depreciation-Machinery
75,000
11,500
Taxes and insurance
Supervisory salaries.
89,000
560,500
Total costs
$ 1,550,725](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0ece9d0d-a73d-49df-8564-6baad6491ed6%2Fa9a3a1e0-0c2f-4a8a-9008-c6feaf0cd209%2F8p42cy_processed.png&w=3840&q=75)
Transcribed Image Text:Antuan Company set the following standard costs per unit for its product.
Direct materials (6 pounds @ $5 per pound)
$ 30
Direct labor (2 hours @ $17 per hour)
34
Overhead (2 hours @ $18.50 per hour).
37
Standard cost per unit
$ 101
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.
$ 45,000
Indirect labor
180,000
Power
45,000
Maintenance
90,000
360,000
Total variable overhead costs
Fixed overhead costs
24,000
Depreciation-Building
Depreciation-Machinery
80,000
Taxes and insurance
12,000
Supervisory salaries.
79,000
Total fixed overhead costs
195,000
Total overhead costs
$ 555,000
The company incurred the following actual costs when it operated at 75% of capacity in October.
Direct materials (91,000 pounds @ $5.10 per pound)
$ 464,100
526,125
Direct labor (30,500 hours @ $17.25 per hour)
Overhead costs
Indirect materials
$ 44,250
Indirect labor
177,750
Power
43,000
Maintenance
96,000
24,000
Depreciation-Building
Depreciation-Machinery
75,000
11,500
Taxes and insurance
Supervisory salaries.
89,000
560,500
Total costs
$ 1,550,725
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