Antuan Company set the following standard costs per unit for its product. Direct materials (5.0 pounds @ $5.00 per pound) $ 25.00 Direct labor (1.6 hours @ $13.00 per hour) 20.80 Overhead (1.6 hours @ $18.50 per hour) 29.60 Standard cost per unit $ 75.40 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 $ 15,000 Indirect labor 90,000 Power 15,000 Maintenance 30,000 Total variable overhead costs 150,000 Fixed overhead costs Depreciation—Building 24,000 Depreciation—Machinery 70,000 Taxes and insurance 17,000 Supervisory salaries 183,000 Total fixed overhead costs 294,000 Total overhead costs $ 444,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (76,500 pounds @ $5.10 per pound) $ 390,150 Direct labor (19,000 hours @ $13.30 per hour) 252,700 Overhead costs Indirect materials $ 41,450 Indirect labor 176,450 Power 17,250 Maintenance 34,500 Depreciation—Building 24,000 Depreciation—Machinery 94,500 Taxes and insurance 15,300 Supervisory salaries 183,000 586,450 Total costs $ 1,229,300 Required: 1. Prepare flexible overhead budgets for October showing amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels.
Antuan Company set the following standard costs per unit for its product. Direct materials (5.0 pounds @ $5.00 per pound) $ 25.00 Direct labor (1.6 hours @ $13.00 per hour) 20.80 Overhead (1.6 hours @ $18.50 per hour) 29.60 Standard cost per unit $ 75.40 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 $ 15,000 Indirect labor 90,000 Power 15,000 Maintenance 30,000 Total variable overhead costs 150,000 Fixed overhead costs Depreciation—Building 24,000 Depreciation—Machinery 70,000 Taxes and insurance 17,000 Supervisory salaries 183,000 Total fixed overhead costs 294,000 Total overhead costs $ 444,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (76,500 pounds @ $5.10 per pound) $ 390,150 Direct labor (19,000 hours @ $13.30 per hour) 252,700 Overhead costs Indirect materials $ 41,450 Indirect labor 176,450 Power 17,250 Maintenance 34,500 Depreciation—Building 24,000 Depreciation—Machinery 94,500 Taxes and insurance 15,300 Supervisory salaries 183,000 586,450 Total costs $ 1,229,300 Required: 1. Prepare flexible overhead budgets for October showing amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter9: Standard Costing: A Functional-based Control Approach
Section: Chapter Questions
Problem 30P: Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following...
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Antuan Company set the following standard costs per unit for its product.
Direct materials (5.0 pounds @ $5.00 per pound) | $ 25.00 |
---|---|
Direct labor (1.6 hours @ $13.00 per hour) | 20.80 |
29.60 | |
$ 75.40 |
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 | $ 15,000 |
Indirect labor | 90,000 |
Power | 15,000 |
Maintenance | 30,000 |
Total variable overhead costs | 150,000 |
Fixed overhead costs | |
24,000 | |
Depreciation—Machinery | 70,000 |
Taxes and insurance | 17,000 |
Supervisory salaries | 183,000 |
Total fixed overhead costs | 294,000 |
Total overhead costs | $ 444,000 |
The company incurred the following actual costs when it operated at 75% of capacity in October.
Direct materials (76,500 pounds @ $5.10 per pound) | $ 390,150 | |
---|---|---|
Direct labor (19,000 hours @ $13.30 per hour) | 252,700 | |
Overhead costs | ||
Indirect materials | $ 41,450 | |
Indirect labor | 176,450 | |
Power | 17,250 | |
Maintenance | 34,500 | |
Depreciation—Building | 24,000 | |
Depreciation—Machinery | 94,500 | |
Taxes and insurance | 15,300 | |
Supervisory salaries | 183,000 | 586,450 |
Total costs | $ 1,229,300 |
Required:
1. Prepare flexible overhead budgets for October showing amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels.
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