Antuan Company set the following standard costs for one unit

Antuan Company set the following standard costs for one unit of its product. Direct materials (3.0 Ibs.$5.00 per Ib.) Direct labor (1.8 hrs. $13.00 per hr.) Overhead (1.8 hrs.@$18.50 per hr.) Total standard cost $15.00 23.40 33.30 $71.70 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 Indirect labor Power Repairs and maintenance Total variable overhead costs $. 15,000 75,000 15,000 30,000 $135,000 Fixed overhead costs Depreciation-Building Depreciation-Machinery Taxes and insurance Supervision Total fixed overhead costs 25,000 71,000 17,000 251,500 364,500 $499,500 Total overhead costs

Solution

Actual output 15000 Std labour hour per unit 1.8 hours Std labour hours for actual output 27000 hours Actual Labour hours used 23000 hours Std rate per hour 13 Actual rate per hour 13.4 Actual Standard AR AH SR AH SR SH 13.4 23000 13 23000 13 27000 308200 299000 299000 351000 -9200 52000 Labour rate variance: 9200 Unfav Labour efficiency variance: 52000 fav Labour cost variance 42800 Fav