The Filipinas Cement Manufacturing Company uses a standard cost system for its production of cement. Cement...
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The Filipinas Cement Manufacturing Company uses a standard cost system for its production of cement. Cement is produced by mixing two major raw materials components, A (lime) and B (clay), with water and by adding a third raw materials component C, quantitatively insignificant. Materials standards and cost for the production of 100 tons of output are: Components Amount Tons Cost Percent of Input Material A Material B Material C Input Output 55 44 11 110 P43.00 35.00 25.00 Fixed Overhead Total Quantity 50% 40% 10% 100% P 2,365 1,540 275 P 8,250 12,375 P20,625 P4,180 P4,180 100 The monthly factory overhead budget for a normal capacity level of 16,500 direct labor hours is as follows: Variable Overhead @P38.00/ton @P41.80/ton To convert 110 tons of raw materials into 100 tons of finished cement requires 500 direct labor hours at P2.50 per direct labor hour or P12.50 per ton. Factory overhead is applied on a direct labor hour basis. Actual data for the month of April: Production of 3,234 tons of finished cement, with costs as follows: Direct labor Fixed factory overhead Variable factory overhead Material A Material B Material C Materials Purchased 15,800 hours @ P2.65 per hour P11,075 P8,490 Quantity Price per Ton 2,000 tons P44 1,200 tons 37 500 tons 24 No inventories of raw materials or work-in-process at the beginning of the month of April existed. The materials price variance is assumed to be realized at the time of purchase. Required: (a) materials price, mix, and yield variances, (b) direct labor variances, and (c) factory overhead variance using (c1) two-variance method, and (c2) three-variance method. Materials Requisitioned Quantity 1,870 tons 1,100 tons 440 tons The Filipinas Cement Manufacturing Company uses a standard cost system for its production of cement. Cement is produced by mixing two major raw materials components, A (lime) and B (clay), with water and by adding a third raw materials component C, quantitatively insignificant. Materials standards and cost for the production of 100 tons of output are: Components Amount Tons Cost Percent of Input Material A Material B Material C Input Output 55 44 11 110 P43.00 35.00 25.00 Fixed Overhead Total Quantity 50% 40% 10% 100% P 2,365 1,540 275 P 8,250 12,375 P20,625 P4,180 P4,180 100 The monthly factory overhead budget for a normal capacity level of 16,500 direct labor hours is as follows: Variable Overhead @P38.00/ton @P41.80/ton To convert 110 tons of raw materials into 100 tons of finished cement requires 500 direct labor hours at P2.50 per direct labor hour or P12.50 per ton. Factory overhead is applied on a direct labor hour basis. Actual data for the month of April: Production of 3,234 tons of finished cement, with costs as follows: Direct labor Fixed factory overhead Variable factory overhead Material A Material B Material C Materials Purchased 15,800 hours @ P2.65 per hour P11,075 P8,490 Quantity Price per Ton 2,000 tons P44 1,200 tons 37 500 tons 24 No inventories of raw materials or work-in-process at the beginning of the month of April existed. The materials price variance is assumed to be realized at the time of purchase. Required: (a) materials price, mix, and yield variances, (b) direct labor variances, and (c) factory overhead variance using (c1) two-variance method, and (c2) three-variance method. Materials Requisitioned Quantity 1,870 tons 1,100 tons 440 tons
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a Material Price Variance P 3900 U Material Mix Variance P 330 U Material Yield Variance P 560120 F U is Unfavorable variance F is favorable variance Working i Material Price variance AP SP AQ Where A... View the full answer
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