You have recently graduated from a university and have accepted a position with Villar Company, the manufacturer of a popular consumer product. During your first week on the job, the vice president has impressed with your work. She has been so impressed, in fact, that yesterday she called you into her office and asked you to attend the executive committee meeting this morning for the purpose of leading a discussion on the variances reported for the last period. Anxious to favorably impress the executive committee you took the variances and supporting data home last night to study.

You recall that manufacturing overhead cost is applied to production on the basis of direct labor-hours and that all of the materials purchased during the period were used in production. Since the company uses JIT to control work flows, work in process inventories are insignificant and can be ignored. It is now 8:30 A.M. The executive meeting starts in just one hour; you realize that to avoid looking like bungling fool you must somehow generate the necessary backup data for the variances before the meeting begins. Without backup data it will be impossible to lead the discussion or answer any questions.

Requirement

1. How many pounds of direct materials were purchased and used in the production of 22,500 units?

2. What was the actual cost per pound of material? 22. How many actual direct labor hours were worked during the period?

3. How much actual variable manufacturing overhead cost was incurred during the period?

4. What is the total fixed manufacturing overhead costs in the companys flexible budget?

Standard Cost Summary Direct materials, 6 pounds @ P3 Direct labor, 0.8 hours @ 25 Variable overhead, 0.8 hours @ P3 Fixed overhead, 0.8 hours @ P7 P18.00 24.00 2.40 P5.60 30.00 Quantity or Efficiency Volume P9,000 UF VARIANCES REPORTED Total standard Spending or Price or Rate costs Budget Direct materials 2405,000 26,900 F Direct labor 990,000 24,850 UF Variable Overhead 254,000* P1,300 F Fixed Overhead P126,000 P500 F "applied to work in process during the period **figure obliterated 27,000 UF ?** P14,000 UF