Standard Costing and Variance Analysis

Case:

Mercurial Company has made the following information available for its production facility for the current month. Fixed overhead was estimated at 22,000 machine hours for the production cycle. Actual machine hours for the period were 22,500; 4,200 units were produced.

Material purchased (107,000 pieces) P 529,650

Material quantity variance P 7,000U

Machine hours used (22,500 hours)

VOH spending variance P 100U

Actual fixed overhead P 81,000

Actual labor cost P 60,300

Actual labor hours 8,500

Mercurial Company's standard costs are as follows:

Direct material 25 pieces @ P5 per piece

Direct labor 2.0 hours @ P7 per hour

Variable overhead

(applied on a machine hour basis) 5.2 hours @ P3.00 per hour

Fixed overhead

(applied on a machine hour basis) 5.2 hours @ P3.50 per hour

Determine the following items:

a. material purchase price variance

b. standard quantity allowed for material

c. total standard cost of material allowed

d. actual quantity of material used

e. labor rate variance

f. standard hours allowed for labor

g. total standard cost of labor allowed

h. labor efficiency variance

i. actual variable overhead incurred

j. standard machine hours allowed

k. variable overhead efficiency variance

l. budgeted fixed overhead

m. applied fixed overhead

n. fixed overhead spending variance

o. volume variance

p. total overhead variance