Using the information in P11.2, compute the overhead controllable variance and the overhead volume variance.

P11.2

Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2022.

Overhead is applied on the basis of standard machine hours. Three hours of machine time are required for each direct labor hour. The jobs were sold for $400,000. Selling and administrative expenses were $40,000. Assume that the amount of raw materials purchased equaled the amount used.

Instructions

a. Compute all of the variances for (1) direct materials and (2) direct labor.
b. Compute the total overhead variance.
c. Prepare an income statement for management. (Ignore income taxes.)

Transcribed Image Text:

Costs and Production Data Actual Standard Raw materials unit cost $2.25 $2.10 Raw materials units 10,600 10,000 Direct labor payroll $120,960 $120,000 Direct labor hours 14,400 15,000 Manufacturing overhead incurred Manufacturing overhead applied Machine hours expected to be used at normal capacity Budgeted fixed overhead for June Variable overhead rate per machine hour Fixed overhead rate per machine hour $189,500 $193,500 42,500 $55,250 $3.00 $1.30