PLEASE PROVIDE SOLUTION

49

ASDFG Company uses standard costing for direct materials and direct labor. The following monthly cost functions were developed for manufacturing overhead items:

Budgeted Overhead Item Cost Function:

Indirect materials P1.00 per DLH

Indirect labor P1.25 per DLH

Utilities P0.50 per DLH

Insurance P50,000

Depreciation P400,000

The cost functions were determined using observations from 20,000 to 30,000 direct labor hours. The company expects to operate at 25,000 direct labor hours per month. The theoretical capacity per month of the company is 30,000 units. Each unit requires 2 direct labor hours. The Company applies overhead using direct labor hours.

Actual data for this month are as follows:

Variable overhead costs P87,000

Fixed overhead costs P423,000

Direct labor hours 26,000

Question 1: The entry pertaining to the volume variance if the standard direct labor hours allowed for this month was 24,000 will be

Group of answer choices

Debit P18,000

Credit P30,000

Credit P20,000

Debit P15,000

50

Refer to ASDFG

Question 2: How much is the variable spending variance if 17,500 units were produced?

Group of answer choices

Cannot be determined using the given.

P15,500 U

P9,250 F

P18,250 U

51

Refer to ASDFG

Question 3: If 13,000 units were produced during the month. How much overhead costs were debited to the Work-in-Process Inventory?

Group of answer choices

P539,500

P266,500

P521,500

P518,750

PLEASE PROVIDE SOLUTION