Question

Problem 24-02A Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2020. Costs and Production Data Actual Standard $2.10 11,400 $169,860 14,900 $211,720 $2.00 11,000 $165,680 15,200 Raw materials unit cost Raw materials units Direct labor payroll Direct labor hours 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 $214,320 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 $487,000. Selling and administrative expenses were $39,300. Assume that the amount of raw materials purchased equaled the amount used. Compute all of the variances for (1) direct materials and (2) direct labor. (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to o decimal places, e.g. 52.) (1) Total materials variance Unfavorable Materials price variance Unfavorable Materials quantity variance Unfavorable

Answer 1

Solution! (a) 1. Total Materials variance = (AQXAP) -(SQ XSP) .. =(11400x$2.1)-(11,000+$2) = $23.990 - $22,000 = $11940 . Material Price variance = (AQXAP) - LAQXSP) = (1,400 x $2.1) -(11,400x52) - $23,940-$22,800 - $1,140 U. Materials Quantity variance = {AQX5p) - (sQXSP) = (11,100 x 12)-(11,000+$2) = $22,800 - $22.000 $800 u

2. Total Laboy variance a. (AHTAR). - (SHASR) 3/11,900 $11.45-(15,200x$10.9). = $169,860 - $ 165,680 = $4,180 Ü Labor price variance' = LAHYAR) - (AHASR) = (14,900 +$11,2)-(14,900+ $10.9) = $ 169,860 - $ 162,410 = $7.450 u Laboy Quantity variance = (AHTSR) -(SHX SR) ... = (14,900 40.9) - (1s,200 110.9) = $ 162,410 - $165,680 - $ 3,270 F

AYALA CORPORALLON . Income statement For the month end sune 30,2020 $487,000 $1402,000) $ 85,000 sales revenue Cost Of goods sold lat standard) Gross profit lat standard) . Veiriances .. Materials price variance . Materials Quantity variance Labor price variance Labor Quantity variance overhead variance. Total variance - Gross profit Lactual) selling and Administs entive Expense Net Income / (Loss) $1,1hou & 2000 $1,45ou $3,600F $2,600F $(3520) $81,480 $139,300) $42,180

(b) Total overheau variance = Actual Applies overhead overhead = $211,720 - $2,14,320 --$2,600. F Explanation's D AQ = Actual Quantity = 11,400 SQ = Standard Quantity => 11,000 AP = Actual pprice $2.1 SP = Standard price =) $2 AH = Actual Hours = 11,1900 5H - Stardor's Hours => 15,200 AR= Actual rate = situel $169,9601 $1111 11 1,900“) SR = Standard Rate = $10.9 (5165,690g F = favourable U = Unfavourable 15,200

2) Applied Overhead - (15,200X93) *($3+$1.7) = (15:200x83) + ($4:7) =$45,600+ $4.7 = $ 214,320. 3) cost of goods sold = (materials + Labort Applies overhead) at standard = (11,000+$2) +$165,680 +$216,320 . - $22,000 + $165,680 +$214,320 . . : $102,000

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