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

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

Direct materials ((4.0 Ibs. @ $6.0 per Ib.)	$	24.00
Direct labor (1.7 hrs. @ $13.0 per hr.)		22.10
Overhead (1.7 hrs. @ $18.50 per hr.)		31.45
Total standard cost	$	77.55

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	$	15,000
Indirect labor		75,000
Power		15,000
Repairs and maintenance		30,000
Total variable overhead costs				$	135,000
Fixed overhead costs
Depreciation—building		24,000
Depreciation—machinery		74,000
Taxes and insurance		20,000
Supervision		218,750
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 Ibs. @ $6.20 per lb.)				$	381,300
Direct labor (29,000 hrs. @ $13.20 per hr.)					382,800
Overhead costs
Indirect materials	$	43,250
Indirect labor		177,250
Power		17,250
Repairs and maintenance		34,500
Depreciation—building		24,000
Depreciation—machinery		99,900
Taxes and insurance		18,000
Supervision		218,750			632,900
Total costs				$	1,397,000

Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels.   3. Compute the direct materials cost variance, including its price and quantity variances.   Explanation: Direct Materials Variances Preliminary computations Actual material used: 61,500 lbs. (given)  Standard quantity of materials: 15,000 units × 4.0 lb. / unit = 60,000 lb. Actual price: $6.20 / lb. (given) Standard price: $6.00 / lb. (given)     Direct material cost variances         Actual units at actual cost [61,500 lbs. @ $6.20] $ 381,300     Standard units at standard cost [60,000 lbs. @ $6.00]   360,000          Direct material cost variance $ 21,300  U        Direct Materials Price and Quantity Variances Actual Costs AQ × AP   AQ × SP   Standard Costs SQ × SP 61,500 × $6.20   61,500 × $6.00   60,000 × $6.00     lbs.        per lb.       lbs.        per lb.       Lbs.        per lb.       $381,300    $369,000   $360,000                 $12,300 U            (Price variance) $9,000 U          (Quantity variance)                     $21,300 U (Total materials variance)     Compute the direct labor cost variance, including its rate and efficiency variances.   Explanation: Direct labor variances Preliminary computations Actual hours used: 29,000 hours (given) Standard hours: 15,000 units × 1.7 hrs. / unit = 25,500 hours Actual rate: $13.20 / hr. (given) Standard rate: $13.00 / hr. (given)     Direct labor cost variances         Actual units at actual cost [29,000 hrs. @ $13.20] $ 382,800     Standard units at standard cost [25,500 hrs. @ $13.00]   331,500          Direct labor cost variance $ 51,300  U        Direct Labor Rate and Efficiency Variances Actual Costs AH × AR   AH × SR   Standard Costs SH × SR 29,000 × $13.20   29,000 × $13.00   25,500 × $13.00     hours      per hr.       hours      per hr.       hours      per hr.       $382,800    $377,000   $331,500                 $5,800 U            (Rate variance) $45,500 U          (Efficiency variance)                     $51,300 U (Total labor variance)     Prepare a detailed overhead variance report that shows the variances for individual items of overhead.