[The following information applies to the questions displayed below.] Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs. @ $5.00 per Ib.) $ 15.00 Direct labor (2.0 hrs. @ $12.00 per hr.) 24.00 Overhead (2.0 hrs. @ $18.50 per hr.) 37.00 Total standard cost $ 76.00 The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume 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 $ 15,000 Indirect labor 90,000 Power 15,000 Repairs and maintenance 45,000 Total variable overhead costs $ 165,000 Fixed overhead costs Depreciation—Building 24,000 Depreciation—Machinery 70,000 Taxes and insurance 17,000 Supervision 279,000 Total fixed overhead costs 390,000 Total overhead costs $ 555,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (45,500 Ibs. @ $5.20 per lb.) $ 236,600 Direct labor (22,000 hrs. @ $12.30 per hr.) 270,600 Overhead costs Indirect materials $ 41,100 Indirect labor 176,400 Power 17,250 Repairs and maintenance 51,750 Depreciation—Building 24,000 Depreciation—Machinery 94,500 Taxes and insurance 15,300 Supervision 279,000 699,300 Total costs $ 1,206,500 rev: 04_27_2020_QC_CS-209738 3. Compute the direct materials cost variance, including its price and quantity variances. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No variance.)

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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[The following information applies to the questions displayed below.]

Antuan Company set the following standard costs for one unit of its product.


Direct materials (3.0 Ibs. @ $5.00 per Ib.)	$	15.00
Direct labor (2.0 hrs. @ $12.00 per hr.)		24.00
Overhead (2.0 hrs. @ $18.50 per hr.)		37.00
Total standard cost	$	76.00

The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume 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	$	15,000
Indirect labor		90,000
Power		15,000
Repairs and maintenance		45,000
Total variable overhead costs			$	165,000
Fixed overhead costs
Depreciation—Building		24,000
Depreciation—Machinery		70,000
Taxes and insurance		17,000
Supervision		279,000
Total fixed overhead costs				390,000
Total overhead costs			$	555,000

The company incurred the following actual costs when it operated at 75% of capacity in October.


Direct materials (45,500 Ibs. @ $5.20 per lb.)			$	236,600
Direct labor (22,000 hrs. @ $12.30 per hr.)				270,600
Overhead costs
Indirect materials	$	41,100
Indirect labor		176,400
Power		17,250
Repairs and maintenance		51,750
Depreciation—Building		24,000
Depreciation—Machinery		94,500
Taxes and insurance		15,300
Supervision		279,000		699,300
Total costs			$	1,206,500

rev: 04_27_2020_QC_CS-209738

3. Compute the direct materials cost variance, including its price and quantity variances. (Indicate the effect of each variance by selecting for favorable, unfavorable, and No variance.)

Problem 23-3A Part 3
B. Compute the direct materlals cost varlance, Including Its price and quantity varlances. (Indicate the effect of each varlance by
selecting for favorable, unfavorable, and No varlance.)
Actual Cost
Standard Cost
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