Question
Below are cost data related to Marlene Manufacturing in producing a unit of product using the standard cost system: Materials - 3 liters @ P20/L
Below are cost data related to Marlene Manufacturing in producing a unit of product using the standard cost system:
Materials - 3 liters @ P20/L
Variable Overhead - 2 hours @ P30/hr
Direct Labor - 2 hours @ P36/hr
Fixed overhead - 2 hours @ P20/hr.
Other information from operations in September are:
Actual production - 11,000 units;
Materials purchased - 50,000 liters @ P19;
Direct labor (23,000 hours) - P869,400;
Depreciation of factory building and equipment - P 100,000;
Sales salaries - P100,000;
Factory Insurance - P20,000;
Sales (9,000 units) - P500;
Indirect labor (Includes P250,000 fixed) - P600,000;
Normal capacity - 10,000 units;
Light (office) - P8,000;
Light and Power (factory includes P40,000 fixed) - P110,000;
Advertising - P80,000;
Materials used - 35,000 liters;
Office supplies used - P5,000;
Administrative salaries - P140,000;
Depreciation (office) - P10,000;
Indirect factory materials used (variable) - P200,000;
Delivery expense - P40,000.
Required:
1. An analysis of the materials, direct labor and factory overhead variance using SVV of the three variance method for factory overhead.
2. Income statement supported by a schedule of variances and treating all variances as period costs.
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