P11-2A Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2017.

Costs and production data Actual Standard

Raw materials unit cost 2.25 2.10

Raw materials units used 10,600 10,000

direct labor payroll 120,960 120,000

direct labor hours worked 14,400 15,000

manufacturing overhead incurred 189,500

manufacturing overhead applied 193,500

machine hours expected to be used at normal capacity 42,500

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) Prepare an income statement for management. (Ignore income taxes)