Bugs NoMore Company manufactures a product effective in controlling beetles. The company uses a standard cost system and a flexible budget. Standard cost of a gallon is as follows:

Direct material:

2 quarts of A - P14

4 quarts of B - P16

Total direct material - P30

Direct labor:

2 hours - 16

Manufacturing overhead - 12

Total - P58

The flexible budget system provides for P50,000 of fixed overhead at normal capacity of 10,000 direct labor hours. Variable overhead is projected at P1 per direct labor hour.

Actual results for the period indicated the following:

Production: 5,000 gallons

Direct Materials:

A - 12,000 quarts purchased at a cost of P7.20/quart; 10,500 quarts used

B - 20,000 quarts purchased at a cost of P3.90/quart; 19,800 quarts used

Direct Labor: 9,800 hours worked at a cost of P79,380

Overhead:

Fixed - P48,100

Variable - 21,000

Total Overhead - P69,100

Required:

What is the application rate per direct labor hour, the total overhead cost equation, the standard quantity for each material, and the standard hours?

Compute the following variances:

a. Total material price variance

b. Total material quantity variance

c. Labor rate variance

d. Labor efficiency variance

e. MOH volume variance

f. MOH efficiency variance

g. MOH spending variance, both fixed and variable