Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2017.

Cost and Production DataActualStandard

Raw materials unit cost$2.25 $2.10

Raw materials units used10,60010,000

Direct labor payroll$120,960 $120,000

Direct labor hours worked14,40015,000

Manufacturing overhead incurred$189,500

Manufacturing overhead applied$189,000

Machine hours expected to be used at normal capacity42,500

Budgeted fixed overhead for June$55,250

Variable overhead rate per machine hour$3.00

Fixed overhead rate per machine hour$1.30

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)compute income statement for management.(Ignore income taxes.)

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