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P23-2A Compute variances, and prepare income statement Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2014.
| P23-2A Compute variances, and prepare income statement | |||||||||||||
| Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2014. | |||||||||||||
| Cost 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.) | |||||||||||||
| NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . | |||||||||||||
| (a)(1) | Total Materials Variance: | ||||||||||||
| ( | AQ | X | AP | ) | minus | ( | SQ | X | SP) | ) | |||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |||
| = | ? | minus | ? | = | Value | ||||||||
| Materials price variance: | |||||||||||||
| ( | AQ | X | AP | ) | minus | ( | AQ | X | SP | ) | |||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |||
| = | ? | minus | ? | = | Value | ||||||||
| Materials quantity variance: | |||||||||||||
| ( | AQ | X | SP | ) | minus | ( | SQ | X | SP | ) | |||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |||
| = | ? | minus | ? | = | Value | ||||||||
| (a)(2) | Total Labor Variance: | ||||||||||||
| ( | AH | X | AR | ) | minus | ( | SH | X | SR | ) | |||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |||
| = | ? | minus | ? | = | Value | ||||||||
| Labor Price variance: | |||||||||||||
| ( | AH | X | AR | ) | minus | ( | AH | X | SR | ) | |||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |||
| = | ? | minus | ? | = | Value | ||||||||
| Labor quantity variance: | |||||||||||||
| ( | AH | X | SR | ) | minus | ( | SH | X | SR | ) | |||
| ( | Value | X | Value | ) | minus | ( | Value | X | Value | ) | |||
| = | ? | minus | ? | = | Value | ||||||||
| (b) | Total Overhead Variance: | ||||||||||||
| = | Actual | minus | Overhead | ||||||||||
| Overhead | Applied | ||||||||||||
| = | Value | minus | Value | = | Value | ||||||||
| (c ) | AYALA CORPORATION | ||||||||||||
| Income Statement | |||||||||||||
| For the Month Ended June 30, 2014 | |||||||||||||
| Sales revenue | Value | ||||||||||||
| Cost of goods sold (at standard) | Value | ||||||||||||
| Gross profit (at standard) | Value | ||||||||||||
| Variances | |||||||||||||
| Material price | Value | ||||||||||||
| Materials quantity | Value | ||||||||||||
| Labor price | Value | ||||||||||||
| Labor quantity | Value | ||||||||||||
| Overhead | Value | ||||||||||||
| Total variance - favorable | Value | ||||||||||||
| Gross profit (actual) | Value | ||||||||||||
| Selling and administrative expenses | Value | ||||||||||||
| Net income | Value | ||||||||||||
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A Textbook Of Cost And Management Accounting
Authors: M N Arora
11th Edition
9390470501, 978-9390470501
