Ahslaine corporation acquired machine with a 200,000 unitslevel of capacity five years ago. Using this machine, the standard labor time is 2 hours per unit. Engineering estimates based on attainable performance is 170, 000 units. Management has planned to produce only 160,000 units in the same machine. total production in the last five years is 828,000 with annual production recorded as follows

First year, 180,000 units

Fourth year, 182,000 units

Second year, 140,000 units

Fifth year, 156,000 units

Third year, 170,000 units

The capacity levels are as follows:

Hours

units

(units x 2 hrs.)

Maximum capacity

200,000

400,000

Practical capacity

170,000

340,000

Budgeted capacity

160,000

320,000

Normal capacity (828,000 units / 5 yrs.)

165,600

331,200

Standard capacity first year (180,000 x 2 hrs.)

360,000

PROBLEM 2: ATERIALS AND LABOR COSTS VARIANCES

The standard unit cost of Ahslaine Company is given below:

Direct materials

4 lbs. @ P4.00

P 16.00

Direct labor

3 hrs. @ P8.00

P 24.00

Variable overhead

3 hrs. @ P2.00

P 6.00

Fixed overhead

3 hrs. @ P3.00

9.00

P 15.00

Total standard unit cost

P 55.00

The company has a normal capacity of 135,000 units and a budgeted capacity of 132,000 units. Actual data taken from the production records in the month of September 2012 are:

Actual production

130,000 units

Material purchases (580,000 lbs. @ P3.90)

P2,262,000

Materials used

525,000 lbs.

Payroll incurred (380,000 lbs. @ P8.15)

P3,097,000

Factory overhead: variable

P800,000

Fixed

P1,250,000

REQUIRED: Materials and labor costs variances using the 2-way and 3-way analyses.

PROBLEM 3: FACTORY OVERHEAD VARIANCES

In analyzing the factory overhead variances, the following relevant data are taken from the original information.

Normal capacity

135,000 units or 405,000 hours

(i.e., 135,000 units x 3 hrs.)

Standard hours

390,000 hrs.

Actual hours

380,000 hrs.

Standard overhead rates: fixed overhead rate

P 3.00 per hour

Variable overhead rates

2.00 per hour

Total overhead rate

P 5.00 per hour

Actual overhead costs

Variable, P800,000 and Fixed, Pi,250,000

Required: Analyze the factory overhead variances using the:

1.2-way analysis (ConVo)

2.3-way Analysis (SVV)

3.4-way Analysis

4.5-way Analysis

PROBLEM 4: MATERIALS PRICE, MIX AND YIELD VARIANCES

The standard materials costs in producing 400 units of product "Tumburtung" are as follows:

Materials

Qty. in lbs.

Price per lb.

Total costs

A

400

P10.00

P4,000

B

500

5.00

2,500

C

100

8.00

800

1000

P7,300

Actual production data in October 2012 are as follows:

Production, 16,000 units

Materials used:

Materials

Qty. in lbs.

Price per lb.

Total Costs

A

18,000

P10.20

P183,600

B

19,000

4.90

93,100

C

5,000

8.05

40,250

42,000 lbs.

P316,950

Required: Determine the materials price, mix and yield variances.

PROBLEM 5: DISPOSITION OF COSTS VARIANCES

To illustrate, let us assume that Bulit Corporation has determined its variances as follows:

Debit

Credit

Materials purchase price variance

P20,000

Materials quantity variance

P20,000

Labor rate variance

5,000

Labor efficiency variance

34,000

Overhead controllable variance

25,000

Overhead volume variance

60,000

Its standard mount of work-in process inventory, finished goods inventory, and cost of goods sold are composed of the following cost elements:

How would the cost variance be allocated and recorded if the variance are considered (1) normal or (2) exceptional?