(6.) 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: Component Tons Cost Percent of Amount S Input Quantity Material A 55 P43.00 50% P 2,365 Material B 44 35.00 40% 1,540 Material C 11 25.00 10% 275 Input 110 100% P4,180 @ P38.00/ton Output 100 P4,180 P41.80/ton The monthly factory overhead budget for a normal capacity level of 16,500 direct labor hours is as follows: Variable Overhead P 8,250 Fixed Overhead 12,375 Total P20,625 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 15,800 hours @ P2.65 per hour Fixed factory overhead P11,075 Variable factory overhead P8,490 Materials Purchased Materials Input 110 100% P4,180 P38.00/ton Output 100 P4,180 P41.80/ton The monthly factory overhead budget for a normal capacity level of 16,500 direct labor hours is as follows: Variable Overhead P 8,250 Fixed Overhead 12,375 Total P20,625 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 15,800 hours @ P2.65 per hour Fixed factory overhead P11,075 Variable factory overhead P8,490 Materials Purchased Materials Requisitioned Quantity Price per Ton Quantity Material A 2,000 tons P44 1,870 tons Material B 1,200 tons 1,100 tons 37 IECOSAC Handouts page 54 24 Material C 500 tons 440 tons 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. STANDARD COSTING FORMULA SHEET (6.) 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: Component Tons Cost Percent of Amount S Input Quantity Material A 55 P43.00 50% P 2,365 Material B 44 35.00 40% 1,540 Material C 11 25.00 10% 275 Input 110 100% P4,180 @ P38.00/ton Output 100 P4,180 P41.80/ton The monthly factory overhead budget for a normal capacity level of 16,500 direct labor hours is as follows: Variable Overhead P 8,250 Fixed Overhead 12,375 Total P20,625 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 15,800 hours @ P2.65 per hour Fixed factory overhead P11,075 Variable factory overhead P8,490 Materials Purchased Materials Input 110 100% P4,180 P38.00/ton Output 100 P4,180 P41.80/ton The monthly factory overhead budget for a normal capacity level of 16,500 direct labor hours is as follows: Variable Overhead P 8,250 Fixed Overhead 12,375 Total P20,625 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 15,800 hours @ P2.65 per hour Fixed factory overhead P11,075 Variable factory overhead P8,490 Materials Purchased Materials Requisitioned Quantity Price per Ton Quantity Material A 2,000 tons P44 1,870 tons Material B 1,200 tons 1,100 tons 37 IECOSAC Handouts page 54 24 Material C 500 tons 440 tons 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. STANDARD COSTING FORMULA SHEET