Sarahata Co. manufactures two staplers, small and regular. The standard quantities of labor and materials per unit for the year are

Small Regular

Direct materials (oz.) 6.0 10.00

Direct labor (hrs.) 0.1 0.15

The standard price paid per pound of direct materials is P1.60. The standard rate for the labor is P8. Overhead is applied on the basis of direct labor hours. A plantwide rate is used. Budgeted overhead for the year is given below:

Budgeted fixed overhead P360,000

Budgeted variable overhead 480,000

The company expects to work 12,000 direct labor during the year, standard overhead rates are computed using this activity level. For every small stapler produced, the company produces data for the year are:

1. Units produced: small staplers, 35,000; regular staplers, 70,000
2. Direct materials purchased and used: 56,000 pounds at P1.55: 13,000 for the small stapler and 43,000 for the regular stapler. There were no beginning or ending raw materials inventories.
3. Direct labor: 14,800 hours: 3,600 hours for small stapler, and 11,200 hours for the regular. Total cost of labor: P114,700
4. Variable overhead: P607,500
5. Fixed overhead: P350,000

1. Compute the materials price and usage variance for each product
2. Compute the labor rate an deficiency variance for each product
3. Compute the variances for fixed overhead (2 answers)