Variance

Problem A.
SUPERIOR COMPANY, which started business on April 1, uses a

standard cost system in accounting for manufactured costs. The standard
costs for a unit of its product are:
Materials (2 kilos at P3 per kilo) . . . . . . . . . . . . . P6.00

Labor (1 hour at P4 per hour) . . . . . . . . . . . . . . . 4.00
Factory overhead (75% of direct labor cost) . . . . 3.00
Total standard cost per unit . . . . . . . . . . . . P13.00
=====
Following data were gathered from Superiors records for April:
Units produced . . . . . . . . . . . . . . . . .. . . . 5,000
Units sold . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P100,000
Purchases (11,000 kilos) . . . . . . . . . . . . . 38,500
Material price variance
(applicable to April purchases). . . P550 unfavorable
Actual quantity of material used. . . . . . . . 10,500 kilos
Actual labor hours worked . . . . . . . . . . . . 4,800 hours
Direct labor rate variance . . . . . . . . . . . . . P800 favorable
Factory overhead total variance . . . . . . . . P500 unfavorable
a. What was the material quantity variance for April?

b. How much was the direct labor efficiency variance for April?
c. How much was the actual total factory overhead costs for April?
Problem B. The STA. ANITA COMAPANY has a budgeted normal monthly

capacity of 5,000 labor hours with a standard production of 4,000 units at
this capacity. Standard costs are:
Materials . . . . . . . . . . . . . . . . . . . . . . . . . . 2 kilos at P1.00
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . P8.00 per hour
Factory overhead at normal capacity:
Fixed expenses . . . . . . . . . . . . . . P5,000
Variable expenses . . . . . . . . . . . P1.00 per labor hour
During September, actual factory overhead totaled p11,250 and 4,500 labor
hours cost P33,750. Production during the month was 3,500 units using
7,200 kilos materials at a cost of P1.20 per kilo.
a. How much was the material price variance for September?

b. How much was the labor efficiency was the labor efficiency variance?
Problem C. Franklin Glass Works production budget for the year ended
November 30, 2001 was based on 200,000 units. Each unit requires two
standard hours of labor for completion. Total overhead was budgeted at
P900,000 for the year, and the fixed overhead rate was estimated to be
P3.00 per unit. Both fixed and variable overhead are assigned to the product
on the basis of direct labor hours. The actual data for the year ended
November 30, 2001 are presented below.
Actual production in units 198,000

Actual direct labor hours 440,000
Actual variable overhead P 352,000
Actual fixed overhead P 575,000
Franklins variable overhead efficiency variance for the year ended
November 30, 2001 is?
Problem D. The Lustre Company produces its only product, Kool Chewing
Gum. The standard overhead cost for one pack of the product follows:
Fixed overhead (1.50 hours at P18.00) P27.00

Variable overhead (1.50 hours at P10.00) 15.00
Total application rate P42.00
Lustre uses expected volume of 20,000 units. During the year, Lustre used
31,500 direct labor hours for the production of 20,000 units. Actual overhead
costs were P545,000 fixed and P308,700 variable.
a. The amount of variable overhead spending variance

b. The total overhead controllable variance
c. The overhead efficiency variance
Problem E. Go-for-Good provides you with the following data:
Actual fixed factory overhead costs. . . . . . . . . . . P32,000

Actual variable factory overhead costs .. . . . . . . 8,000
Actual direct labor hours . . . . . . . . . . . . . . . . . 12,000
Standard direct labor hours. . . . . . . . . . . . . . . . . . . 10,000
Direct labor hours at normal capacity. . . . . . . . . 16,000
Flexible factory overhead budget: P30,000 + P1.00 per direct labor
hour
Required: Determine each of the following:

a. How much is the variable overhead spending variance?
b. How much is the fixed overhead spending variance?
c. How much is the fixed overhead volume variance?
d. How much is the variable overhead efficiency variance?

Variance

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Variance

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Problem A.

SUPERIOR COMPANY, which started business on April 1, uses a

Materials (2 kilos at P3 per kilo) . . . . . . . . . . . . . P6.00

a. What was the material quantity variance for April?

Problem B. The STA. ANITA COMAPANY has a budgeted normal monthly

a. How much was the material price variance for September?

Actual production in units 198,000

Fixed overhead (1.50 hours at P18.00) P27.00

a. The amount of variable overhead spending variance

Problem E. Go-for-Good provides you with the following data:

Actual fixed factory overhead costs. . . . . . . . . . . P32,000

Required: Determine each of the following:

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