Antuan Company set the following standard costs for one unit of its product.
Direct materials (6 Ibs. @ $5 per Ib.)
Direct labor (2 hrs. @ $17 per hr.)
Overhead (2 hrs. @ $18.50 per hr.)
Total standard cost
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% level.
Overhead Budget (75% Capacity)
Variable overhead costs
Repairs and maintenance
Total variable overhead costs
Fixed overhead costs
Taxes and insurance
Total fixed overhead costs
Total overhead costs
The company incurred the following actual costs when it operated at 75% of capacity in October. 1&2. Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed. 3. Compute the direct materials cost variance, including its price and quantity variances round to 2 decimal places. 4.Compute the direct labor cost variance, including its rate and efficiency variances round actual rate to 2 decimal places 5. Prepare a detailed overhead variance report that shows the variances for individual items of overhead.