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Determine the materials and labor variances GRAPHICALLY and BY FORMULA Pre pare the flexible overhead budget Determine the overhead variances using the two-way method. Silva



  1. Determine the materials and labor variances GRAPHICALLY and BY FORMULA
  2. Pre pare the flexible overhead budget
  3. Determine the overhead variances using the two-way method.
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Silva Plastics Company has established standard cost for a unit of manufactured product as follows: Materials (3 kgs. @ P9) P27.00 Labor (1 hour @ P84) 84.00 Variable overhead (1 hour @ P24) 24.00 Fixed overhead (1 hour @ P36) 36.00 Total standard unit cost P171.00 At normal operating capacity, 100,000 units of product should be manufactured in a year. Costs data pertaining to the operations for the year are summarized below: Materials purchased (200,000 kgs.) Materials used in production P1,908,000 185,000 kgs. 58,000 Labor hours Labor rate Factory overhead- Variable Fixed P90.00 per hour P1,380,000 P3,600,000 During the year, 60,000 units of product were put into production and were completed. There were no units in process at the beginning or at the end of the year. There are also no inventories of raw materials or finished goods at the beginning of the year.

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