Answered Essay: head rate ($18.50 per direct labor hour) is based on an expected volume of 75%

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
1&2. Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed.
3. Compute the direct materials cost variance, including its price and quantity variances. (Round actual price to 2 decimal places.)

4. Compute the direct labor cost variance, including its rate and efficiency variances.(Round actual rate to 2 decimal places.)

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