FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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
$
0
0
0
$
$
Standard Cost
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Transcribed Image Text: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 $ 0 0 0 $ $ Standard Cost
Antuan Company set the following standard costs per unit for its product.
Direct materials (6 pounds @ $5 per pound)
$ 30
Direct labor (2 hours @ $17 per hour)
34
Overhead (2 hours @ $18.50 per hour).
37
Standard cost per unit
$ 101
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.
$ 45,000
Indirect labor
180,000
Power
45,000
Maintenance
90,000
360,000
Total variable overhead costs
Fixed overhead costs
24,000
Depreciation-Building
Depreciation-Machinery
80,000
Taxes and insurance
12,000
Supervisory salaries.
79,000
Total fixed overhead costs
195,000
Total overhead costs
$ 555,000
The company incurred the following actual costs when it operated at 75% of capacity in October.
Direct materials (91,000 pounds @ $5.10 per pound)
$ 464,100
526,125
Direct labor (30,500 hours @ $17.25 per hour)
Overhead costs
Indirect materials
$ 44,250
Indirect labor
177,750
Power
43,000
Maintenance
96,000
24,000
Depreciation-Building
Depreciation-Machinery
75,000
11,500
Taxes and insurance
Supervisory salaries.
89,000
560,500
Total costs
$ 1,550,725
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Transcribed Image Text:Antuan Company set the following standard costs per unit for its product. Direct materials (6 pounds @ $5 per pound) $ 30 Direct labor (2 hours @ $17 per hour) 34 Overhead (2 hours @ $18.50 per hour). 37 Standard cost per unit $ 101 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. $ 45,000 Indirect labor 180,000 Power 45,000 Maintenance 90,000 360,000 Total variable overhead costs Fixed overhead costs 24,000 Depreciation-Building Depreciation-Machinery 80,000 Taxes and insurance 12,000 Supervisory salaries. 79,000 Total fixed overhead costs 195,000 Total overhead costs $ 555,000 The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (91,000 pounds @ $5.10 per pound) $ 464,100 526,125 Direct labor (30,500 hours @ $17.25 per hour) Overhead costs Indirect materials $ 44,250 Indirect labor 177,750 Power 43,000 Maintenance 96,000 24,000 Depreciation-Building Depreciation-Machinery 75,000 11,500 Taxes and insurance Supervisory salaries. 89,000 560,500 Total costs $ 1,550,725
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