PROBLEM 1 PROBLEM 4 You have recently graduated from a university and have accepted a position with Villar Company, the Spaulding, Inc. uses standard costing for its one product, baseball bats. The standards call for 3 board- manufacturer of a popular consumer product. During your first week on the job, the vice president has feet of wood at P1.40 per board-foot, and 45 minutes of work at P12 per hour per bat. Total been favorably impressed with your work. She has been so impressed, in fact, that yesterday she called manufacturing overhead costs were estimated at P5,250, of which the variable portion was P0.50 per bat you into her office and asked you to attend the executive committee meeting this moming for the purpose and the fixed portion was PO.75 per bat with an estimate of 4,200 bats to be produced. Spaulding of leading a discussion on the variances reported for last period. Anxious to favorably impress the identifies price variances at the earliest possible point in time. executive committee, you took the variances and supporting data home last night to study, During March, the company had the following results: On your way to work this moming, the papers were laying on the seat of your new, red convertible. As Direct labor used = 3,200 hours at a cost of P37,760 you were crossing a bridge on the highway, a sudden gust of wind caught the papers and blew them over Actual manufacturing overhead fixed costs = P3,000 the edge of the bridge and into the stream below. You managed to retrieve only one page, which Actual manufacturing overhead variable costs = P2,050 contains the following information: Bats produced = 4,000 Required: Compute the following variances for March. Standard Cost Summary 12. Labor quantity variance "Direct materials, 6 pounds at P3 P18.007 13. Total labor variance Direct labor, 0.8 hours at P5 4.00 14. Overhead controllable variance Variable overhead, 0.8 hours at P3 2,40 15. Overhead volume variance Fixed overhead, 0.8 hours at P7 5.60 P30.00 PROBLEM 5 ABLAZE Inc. had the following variances for the most recent month: Total Standard Cost[ VARIANCES REPORTED Materials Price Variance P3,500 U Price or Rate Spending Quantity or | Volume Materials Usage Variance P 720 F or Budget Efficiency Direct Labor Rate Variance P5,770 F Direct materials P405,00 0 P6,900 F P9,000 U Direct Labor Efficiency Variance P6,980 U Direct labor 90,000 4,850 0 7,000 0 Other information induded: actual wages paid P72,310; materials purchased P130,760; standards per unit "Variable overhead 64,000 P1,30 0 P 70 were 2 labor hours at P5 per hour, 3 pounds at P6 per pound. There were no changes in materials Fixed overhead 126,000 500 F P14,0000 inventories. Applied to Work in process during the period 2 Figure obliterated. Required: 16. Find the units produced. You recall that manufacturing overhead cost is applied to production on the basis of direct labor-hours 17. Find the standard labor hours. and that all of the materials purchased during the period were used in production. Since the company 18. Find the actual labor hours. uses JIT to control work flows, work in process inventories are insignificant and can be ignored. It is 19. Find the standard quantity of materials allowed. now 8:30 A.M. The executive committee meeting starts in just one hour; you realize that to avoid 20. Find the actual quantity of materials used. looking like a bungling fool you must somehow generate the necessary "backup" data for the variances before the meeting begins. Required: Without backup data it will be impossible to lead the discussion or answer any questions. 1. How many pounds of direct materials were purchased and used in the production of 22,500 units? 2. What was the actual cost per pound of material? 3. How many actual direct labor hours were worked during the period? 4. How much actual variable manufacturing overhead costwas incurred during the period? 5. What is the total fixed manufacturing overhead cost in the company's flexible budget? 6. What were the denominator hours for last period? PROBLEM 2 Lapins Company has a standard costing system. The following data are available for July: A. Actual manufacturing overhead cost incurred: P22,000 3. Actual machine hours worked: 1,600 C. Overhead volume variance: P3,600 Unfavorable D. Total overhead variance: P1,000 Unfavorable E. Overhead is assigned to production on the basis of machine hours Required: Determine the following: 7. Controllable overhead variance B. Overhead applied PROBLEM 3 Stone Company planned to produce 20,000 units of product and work at the 60,000 direct labor hours level of activity for 2009. Manufacturing overhead at this level of activity and the predetermined overhead rate are as follows: Predetermined Overhead Rate per Direct Labor Hour Variable manufacturing overhead P300,000 P5.00 Fixed manufacturing overhead 180,000 3.00 Total manufacturing overhead P480,000 P8.00 At the end of 2009, 21,000 units were actually produced and 61,500 direct labor hours were actually worked. Total actual manufacturing overhead costs were P488,000. Required: Using a two-variance analysis of manufacturing overhead, calculate the following variances and indicate whether they are favorable or unfavorable 9. Overhead controllable variance. 10. Overhead volume variance. 11. Fixed Spending variance