The following information applies to the questions displayed below.] Antuan Company set the following standard costs per unit for its product. Direct materials (4.0 pounds @ $6.00 per pound) $ 24.00 Direct labor (1.8 hours @ $11.00 per hour) 19.80 Overhead (1.8 hours @ $18.50 per hour) 33.30 Standard cost per unit $ 77.10 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 $ 30,000 Indirect labor 75,000 Power 30,000 Maintenance 30,000 Total variable overhead costs 165,000 Fixed overhead costs Depreciation—Building 23,000 Depreciation—Machinery 70,000 Taxes and insurance 17,000 Supervisory salaries 224,500 Total fixed overhead costs 334,500 Total overhead costs $ 499,500 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,000 pounds @ $6.10 per pound) $ 372,100 Direct labor (22,000 hours @ $11.40 per hour) 250,800 Overhead costs Indirect materials $ 41,900 Indirect labor 176,450 Power 34,500 Maintenance 34,500 Depreciation—Building 23,000 Depreciation—Machinery 94,500 Taxes and insurance 15,300 Supervisory salaries 224,500 644,650 Total costs $ 1,267,550 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 Standard Cost Actual quantityselected answer correct x Actual priceselected answer correct Actual quantityselected answer correct x Standard priceselected answer correct Standard quantityselected answer correct x Standard priceselected answer correct not attempted x 0 not attempted x not attempted not attempted x not attempted not attempted $0 0 $0 Direct materials price varianceselected answer correct $0 Unfavorableselected answer correct Direct materials quantity varianceselected answer correct 0 Unfavorableselected answer correct Variable overhead efficiency varianceselected answer incorrect not attempted Unfavorableselected answer correct

The following information applies to the questions displayed below.] Antuan Company set the following standard costs per unit for its product. Direct materials (4.0 pounds @ $6.00 per pound) $ 24.00 Direct labor (1.8 hours @ $11.00 per hour) 19.80 Overhead (1.8 hours @ $18.50 per hour) 33.30 Standard cost per unit $ 77.10 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 $ 30,000 Indirect labor 75,000 Power 30,000 Maintenance 30,000 Total variable overhead costs 165,000 Fixed overhead costs Depreciation—Building 23,000 Depreciation—Machinery 70,000 Taxes and insurance 17,000 Supervisory salaries 224,500 Total fixed overhead costs 334,500 Total overhead costs $ 499,500 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (61,000 pounds @ $6.10 per pound) $ 372,100 Direct labor (22,000 hours @ $11.40 per hour) 250,800 Overhead costs Indirect materials $ 41,900 Indirect labor 176,450 Power 34,500 Maintenance 34,500 Depreciation—Building 23,000 Depreciation—Machinery 94,500 Taxes and insurance 15,300 Supervisory salaries 224,500 644,650 Total costs $ 1,267,550 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 Standard Cost Actual quantityselected answer correct x Actual priceselected answer correct Actual quantityselected answer correct x Standard priceselected answer correct Standard quantityselected answer correct x Standard priceselected answer correct not attempted x 0 not attempted x not attempted not attempted x not attempted not attempted $0 0 $0 Direct materials price varianceselected answer correct $0 Unfavorableselected answer correct Direct materials quantity varianceselected answer correct 0 Unfavorableselected answer correct Variable overhead efficiency varianceselected answer incorrect not attempted Unfavorableselected answer correct

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

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

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

Direct materials (4.0 pounds @ $6.00 per pound)	$ 24.00
Direct labor (1.8 hours @ $11.00 per hour)	19.80
Overhead (1.8 hours @ $18.50 per hour)	33.30
Standard cost per unit	$ 77.10

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	$ 30,000
Indirect labor	75,000
Power	30,000
Maintenance	30,000
Total variable overhead costs	165,000
Fixed overhead costs
Depreciation—Building	23,000
Depreciation—Machinery	70,000
Taxes and insurance	17,000
Supervisory salaries	224,500
Total fixed overhead costs	334,500
Total overhead costs	$ 499,500

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

Direct materials (61,000 pounds @ $6.10 per pound)		$ 372,100
Direct labor (22,000 hours @ $11.40 per hour)		250,800
Overhead costs
Indirect materials	$ 41,900
Indirect labor	176,450
Power	34,500
Maintenance	34,500
Depreciation—Building	23,000
Depreciation—Machinery	94,500
Taxes and insurance	15,300
Supervisory salaries	224,500	644,650
Total costs		$ 1,267,550

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	Standard Cost
Actual quantityselected answer correct	x	Actual priceselected answer correct	Actual quantityselected answer correct	x	Standard priceselected answer correct	Standard quantityselected answer correct	x	Standard priceselected answer correct
not attempted	x	0	not attempted	x	not attempted	not attempted	x	not attempted
	not attempted
	$0	0	$0

Direct materials price varianceselected answer correct	$0	Unfavorableselected answer correct
Direct materials quantity varianceselected answer correct	0	Unfavorableselected answer correct
Variable overhead efficiency varianceselected answer incorrect	not attempted	Unfavorableselected answer correct

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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