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.

Problem 2

Variable overhead costs variances. The variable portion of Camarines Norte Corporation's flexible budget for overhead is given below:

Machine hours

Overhead Rate per hr. 10,000 18,000 24,000

Utilities P1.40 P14,000 P25,000 P33,600

Supplies 0.20 2,000 3,600 4,800

Maintenance 1.20 12,000 21,600 28,800

Miscellaneous 0.80 8,000 14,400 19,200

Last month, the company worked for 16,000 machine hours and incurred the following costs

Utilities P 21,000

Supplies 3,500

Maintenance 19,700

Miscellaneous 12,400

Required:

1. Compute the variable overhead spending variance.
2. Compute the variable overhead efficiency variance.

Problem 3

Fixed overhead costs variances. Relevant data relating to fixed overhead costs of Lucky Chan Corporation for a recent period is given below:

Costs:

Actual fixed overhead incurred P88,000

Spending variance 4,000 F

Activity:

Number of units produced 9,500

Standard hours allowed per unit 3

Normal capacity (machine hours) 20,000

Overhead cost is applied to products on the basis of machine hours.

Required:

1. Budgeted fixed overhead
2. Fixed overhead rate per hour
3. Fixed overhead rate per unit
4. Volume variance