P25-2A Complute variances, and prepare Income statemen Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2017. 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 $189,000 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. (6) 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 "?". ( at) Total Materials Variance minus Variance X SO Value AP Value 2 X X ( Value SP Value 2 U Materials price variance: AQ Value 2 X X minus ( AP Value ? AQ Value X X Variance SP Value ? minus ? U Materials quantity variance AQ X Value ) minus - Variance SP Value 2 SO Value X - SP Value 7 minus ? U (a (2) Total Labor Variances Value minus Variance AR Value SH Value X SR Value ? minus ? C Labor Price variance: Value ) minus Variance X AR Value ? AH Value X SR Value ? minus ? U Labor quantity variance: AH 2 minus Variance X X SR Value 2 SH Value X X Value SR Value ? > minus ? F (b) Total Overhead Variance: minus Actual Overhead Overhead Applied Value minus Value ? F (c Value ? AYALA CORPORATION Income Statement For the Month Ended June 30, 2017 Sales revenue Cost of goods sold (at standard) Gross profit (at standard) Variances Material price Value Materials quantity Value Labor price Value Labor quantity Value Overhead Value Total variance - favorable Gross profit (actual) Selling and administrative expenses Net income Value ? Note Cost of goods sold Standard direct material Standard direct labor Manufacturing OH Total cost of goods sold Value Value Value