Direct materials (3.0 Ibs. @ $5.00 per Ib.) $ 15.00 Direct labor (1.8 hrs. @ $12.00 per hr.) 21.60 Overhead (1.8 hrs. @ $18.50 per hr.) 33.30 Total standard cost $ 69.90 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 30,000 Total variable overhead costs $ 150,000 Fixed overhead costs Depreciation—Building 23,000 Depreciation—Machinery 70,000 Taxes and insurance 17,000 Supervision 239,500 Total fixed overhead costs 349,500 Total overhead costs $ 499,500 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46,000 Ibs. @ $5.20 per lb.) $ 239,200 Direct labor (19,000 hrs. @ $12.30 per hr.) 233,700 Overhead costs Indirect materials $ 41,600 Indirect labor 176,500 Power 17,250 Repairs and maintenance 34,500 Depreciation—Building 23,000 Depreciation—Machinery 94,500 Taxes and insurance 15,300 Supervision 239,500 642,150 Total costs $ 1,115,050

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter23: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 9DQ: At the end of the period, the factory overhead account has a credit balance of 10,000. (a) Is the...

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Direct materials (3.0 Ibs. @ $5.00 per Ib.)	$	15.00
Direct labor (1.8 hrs. @ $12.00 per hr.)		21.60
Overhead (1.8 hrs. @ $18.50 per hr.)		33.30
Total standard cost	$	69.90

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		30,000
Total variable overhead costs			$	150,000
Fixed overhead costs
Depreciation—Building		23,000
Depreciation—Machinery		70,000
Taxes and insurance		17,000
Supervision		239,500
Total fixed overhead costs				349,500
Total overhead costs			$	499,500

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


Direct materials (46,000 Ibs. @ $5.20 per lb.)			$	239,200
Direct labor (19,000 hrs. @ $12.30 per hr.)				233,700
Overhead costs
Indirect materials	$	41,600
Indirect labor		176,500
Power		17,250
Repairs and maintenance		34,500
Depreciation—Building		23,000
Depreciation—Machinery		94,500
Taxes and insurance		15,300
Supervision		239,500		642,150
Total costs			$	1,115,050

ANTUAN COMPANY
Overhead Variance Report
For Month Ended October 31
Expected production volume
Production level achieved
Volume variance
Flexible Budget Actual Results Variances
Fav. / Unfav.
Variable costs
Fixed costs
Total overhead costs

4. Compute the direct labor cost variance, including its rate and efficiency variances. (Indicate the effect of each variance by
selecting for favorable, unfavorable, and No variance. Round "Rate per hour" answers to two decimal places.)
Actual Cost
Standard Cost
$

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