Problem 1.

Materials and labor costs variances. During the most recent month, the following activities were recorded by Pampanga Company relative to its product Mekeni.

a.Thirty thousand ounces of material Karen were purchased at a cost of P2.45 per ounce. Twenty eight thousand ounces were used to produce 4.500 units of Mekeni.

b.Forty tree thousand of direct labor hours were recorded at a total labor cost of P4.515,000.

The standard direct materials and direct labor cost per unit of Mekeni are given below:

Standard quantity Standard price Standard

or hours per unit or rate cost per unit

Direct materials 7 oz. P2.50 per oz. P17.50

Direct labor 10 hrs. 11.00 per hr. 110.00

Required: Indicate your variance as unfavorable (U) or favorable (F).

1. Compute the standard materials quantity of the actual production.

2. Compute the standard direct labor hours of the actual production.

3. Calculate the materials price variance per ounce and the total materials price variance on quantity purchased.

4. Calculate the total materials price variance on quantity used.

5. Calculate the materials quantity variance per ounce.

6. Calculate the tptal materials quantity variance.

7. Calculate the total or net materials cost variance.

8. Calculate the direct labor rate variance per hour.

9. Calculate the total direct labor rate variance.

10. Calculate the direct labor efficiency variance per unit.

11. Calculate the total direct labor efficiency variance.

12. Calculate the total or net direct labor cost variance.