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

Direct materials (4.0 Ibs. @ $4.00 per Ib.)	$	16.00
Direct labor (1.8 hrs. @ $12.00 per hr.)		21.60
Overhead (1.8 hrs. @ $18.50 per hr.)		33.30
Total standard cost	$	70.90

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		23,000
Depreciationmachinery		72,000
Taxes and insurance		17,000
Supervision		222,500
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 (61,500 Ibs. @ $4.10 per lb.)				$	252,150
Direct labor (28,000 hrs. @ $12.20 per hr.)					341,600
Overhead costs
Indirect materials	$	41,600
Indirect labor		176,000
Power		34,500
Repairs and maintenance		34,500
Depreciationbuilding		23,000
Depreciationmachinery		97,200
Taxes and insurance		15,300
Supervision		222,500			644,600
Total costs				$	1,238,350

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

2

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

Actual Cost Standard Cost

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