Antuan company set the following standard costs for one unit of its product.

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

Direct materials (4.0 Ibs. @ $6.00 per Ib.)

$

24.00

Direct labor (1.7 hrs. @ $12.00 per hr.)

20.40

Overhead (1.7 hrs. @ $18.50 per hr.)

31.45

Total standard cost

$

75.85

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

75,000

Power

15,000

Repairs and maintenance

30,000

Total variable overhead costs

$

135,000

Fixed overhead costs

Depreciation—building

23,000

Depreciation—machinery

71,000

Taxes and insurance

16,000

Supervision

226,750

Total fixed overhead costs

336,750

Total overhead costs

$

471,750

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

Direct materials (60,500 Ibs. @ $6.20 per lb.)

$

375,100

Direct labor (29,000 hrs. @ $12.20 per hr.)

353,800

Overhead costs

Indirect materials

$

41,650

Indirect labor

176,300

Power

17,250

Repairs and maintenance

34,500

Depreciation—building

23,000

Depreciation—machinery

95,850

Taxes and insurance

14,400

Supervision

226,750

629,700

Total costs

$

1,358,600

3.

Compute the direct materials cost variance, including its price and quantity variances.

4.

Compute the direct labor cost variance, including its rate and efficiency variances.

5.

Prepare a detailed overhead variance report that shows the variances for individual items of overhead.