Question

Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2017 Costs and Production Data Raw materials unit cost Raw materials units used Direct labor payroll Direct labor hours worked Manufacturing overhead incurred Manufacturing overhead applied Machine hours expected to be used at normal capacity Budgeted fixed overhead for June Variable overhead rate per machine hour Fixed overhead rate per machine hour Actual Standard $2.10 $1.90 11,300 10,700 $175,500 $171,360 15.000 15.300 $212,930 $215.730 43.500 $73.950 $3.00 $1.70 Overhead is applied on the basis of standard machine hours. 3.00 hours of machine time are required for each direct labor hour. The jobs were sold for $453.000. Selling and administrative expenses were $39,300. Assume that the amount of raw materials purchased equaled the amount used.

Answer 1

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Standard Material Price		$                   1.90
Standard Quantity		10,700
Actual Quantity Purchased		11,300
Actual Quantity used		11,300
Actual Matrial Price		$                   2.10
Material Price Variance	AQ(AP-SP)
	(Actual Price	-	Standard Price)	*	Actual Quantity
	$                                        2.10	-	$                       1.90	*	11300
	$                                      2,260	Unfavorable
Material Quantity Variance	SP(AQ-SQ)
	(Actual Quantity	-	Standard Qty)	*	Standard Price
	11,300	-	10,700	*	$                       1.90
	$                                1,140.00	Unfavorable
Total Material Variance	$                                3,400.00	Unfavorable
Standard Hour Rate	$171,360/15,300	$                 11.20
Standard Hour		15,300
Actual Hours		15,000
Actual Hour Rate	$175,500/15,000	$                 11.70
Labor Rate Variance	AH(AR-SR)
	(Actual Rate	-	Standard Rate)	*	Actual Hours
	$                                      11.70	-	$                    11.20	*	15000
	$                                      7,500	Unfavorable
Labor Efficiency Variance	SR(AH-SH)
	(Actual Quantity	-	Standard Qty)	*	Standard Price
	15,000	-	15,300	*	$                     11.20
	$                                      3,360	Favorable
Total Labor Variance	$                                      4,140	Unfavorable
Part b
Total Overhead Variance:
Actual Overhead		$            212,930
Applied Overhead	15,300*3 Hours*$4.70	$            215,730
Overhead Variance		$                 2,800	Favorable
Part c
Sales revenue			$                453,000	#
Cost of goods sold (at standard):				#
Direct Material		$               20,330
Direct Labor		$            171,360
Overheads		$            215,730	$             (407,420)
Gross profit (at standard)			$                  45,580
Variances:
Materials price	$                                   (2,260)	U
Materials quantity	$                                   (1,140)	U
Labor price	$                                   (7,500)	U
Labor quantity	$                                      3,360	F
Overhead	$                                      2,800	F
Total variance—favorable			$                  (4,740)
Gross profit (actual)			$                  40,840
Selling and administrative expenses			$                (39,300)	#
Net income			$                    1,540