Antuan Company set the following standard costs for one unit of its product.
Direct materials (3.0 Ibs. @ $6.00 per Ib.) $ 18.00
Direct labor (1.6 hrs. @ $14.00 per hr.) 22.40
Overhead (1.6 hrs. @ $18.50 per hr.) 29.60
Total standard cost $ 70.00
The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factorys capacity of 20,000 units per month. Following are the companys 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
Repairs and maintenance 30,000
Total variable overhead costs $ 165,000
Fixed overhead costs
DepreciationBuilding 24,000
DepreciationMachinery 71,000
Taxes and insurance 17,000
Supervision 167,000
Total fixed overhead costs 279,000
Total overhead costs $ 444,000
The company incurred the following actual costs when it operated at 75% of capacity in October.
Direct materials (46,000 Ibs. @ $6.20 per lb.) $ 285,200
Direct labor (23,000 hrs. @ $14.20 per hr.) 326,600
Overhead costs
Indirect materials $ 41,850
Indirect labor 176,150
Power 34,500
Repairs and maintenance 34,500
DepreciationBuilding 24,000
DepreciationMachinery 95,850
Taxes and insurance 15,300
Supervision 167,000 589,150
Total costs $ 1,200,950
3. Compute the direct materials cost variance, including its price and quantity variances. AQ = Actual Quantity SQ - Standard Quantity AP = Actual Price SP = Standard Price Actual Cost Standard Cost $ 0 
