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| Antuan Company set the following standard costs for one unit of its product. |
| Direct materials ((3.0 Ibs. @ $6.0 per Ib.) | $ | 18.00 |
| Direct labor (1.7 hrs. @ $10.0 per hr.) | 17.00 | |
| Overhead (1.7 hrs. @ $18.50 per hr.) | 31.45 | |
| Total standard cost | $ | 66.45 |
| 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% 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 | |||||
| Depreciation—building | 24,000 | ||||
| Depreciation—machinery | 74,000 | ||||
| Taxes and insurance | 16,000 | ||||
| Supervision | 192,750 | ||||
| Total fixed overhead costs | 306,750 | ||||
| Total overhead costs | $ | 471,750 | |||
| The company incurred the following actual costs when it operated at 75% of capacity in October. |
| Direct materials (45,500 Ibs. @ $6.10 per lb.) | $ | 277,550 | |||||||||||
| Direct labor (28,000 hrs. @ $10.30 per hr.) | 288,400 | ||||||||||||
| Overhead costs | |||||||||||||
| Indirect materials | $ | 44,250 | |||||||||||
| Indirect labor | 177,500 | ||||||||||||
| Power | 34,500 | ||||||||||||
| Repairs and maintenance | 34,500 | ||||||||||||
| Depreciation—building | 24,000 | ||||||||||||
| Depreciation—machinery | 99,900 | ||||||||||||
| Taxes and insurance | 14,400 | ||||||||||||
| Supervision | 192,750 | 621,800 | |||||||||||
| Total costs | $ | 1,187,750 | |||||||||||
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