The corrected text is as follows:
Antuan Company set the following standard costs per unit for its product.
Direct materials (4.0 pounds @ $4.00 per pound)
Direct labor (1.7 hours @ $14.00 per hour)
Overhead (1.7 hours @ $18.50 per hour)
Standard cost per unit
$16.00
$23.80
$31.45
$71.25
The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month.
Overhead Budget (75% Capacity)
Variable overhead costs
Indirect materials $15,000
Indirect labor $75,000
Power $15,000
Maintenance $30,000
Total variable overhead costs $135,000
Fixed overhead costs
Depreciation-Building $25,000
Depreciation-Machinery $70,000
Taxes and insurance $17,000
Supervisory salaries $224,750
Total fixed overhead costs $336,750
Total overhead costs $471,750
The company incurred the following actual costs when it operated at 75% of capacity in October:
Direct materials (61,500 pounds @ $4.20 per pound)
Direct labor (20,000 hours @ $14.30 per hour)
Overhead costs $258,300
Indirect materials $286,000
Indirect labor $75,000
Power $41,750
Maintenance $176,950
Depreciation-Building $17,250
Depreciation-Machinery $34,500
Taxes and insurance $25,000
Supervisory salaries $94,500
Total costs $1,174,300
Compute the direct materials variance, including its price and quantity variances.
Note: Indicate the effect of each variance by selecting favorable, unfavorable, or no variance. Actual quantity Actual Cost
