Question

Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2020. Costs and Production Data Actual Standard Raw materials unit cost $2.25 $2.10 Raw materials units 10,600 10,000 Direct labor payroll $120,960 $120,000 Direct labor hours 14,400 15,000 Manufacturing overhead incurred $189,500 Manufacturing overhead applied $193,500 Machine hours expected to be used at normal capacity 42,500 Budgeted fixed overhead for June $55,250 Variable overhead rate per machine hour $3.00 Fixed overhead rate per machine hour $1.30 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 $400,000. Selling and administrative expenses were $40,000. 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 0 decimal places, e.g. 52.) (1) Total materials variance $ Materials price variance $ Materials quantity variance $ (2) Total labor variance $ Labor price variance $ Labor quantity variance $ Compute the total overhead variance. Total overhead variance $ Prepare an income statement for management. (Ignore income taxes.) (Round per unit values to 2 decimal places, e.g. 52.75 and final answers to 0 decimal places, e.g. 52.) AYALA CORPORATION Income Statement $ $ $

Answer 1

Answer:-

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	Standard			Actual
Particulars	Units	Price	Total	Units	Price	Total
Materials	10,000.00	2.10	21,000.00	10,600.00	2.25	23,850.00
Labor	15,000.00	8.00	120,000.00	14,400.00	8.4000	120,960.00
			141,000.00			144,810.00
Total Material Variance =	Standard Material Cost - Actual Material Cost
Total Material Variance =	21,000 - 23,850
Total Material Variance =	2,850 Unfavourable
Material Price Variance	(Standard Price - Actual Price)*Actual Quantity
Material Price Variance	(2.10 - 2.25) 10,600
Material Price Variance	1,590 Adverse
Material Quantity Variance	(Standard Qty - Actual Qty)*Standard Price
Material Quantity Variance	(10,000 - 10,600)2.10
Material Quantity Variance	1,260 Unfavourable
Total Labor Variance =	Standard Labor Cost - Actual Labor Cost
Total Labor Variance =	120,000-120,960
Total Labor Variance =	960 Unfavourable
Labor Rate Variance	(Standard Rate - Actual Rate)*Actual hours
Labor Rate Variance	(8-8.40)14,400
Labor Rate Variance	5,760 Unfavourable
Labor Quantity Variance	(Standard hrs - Actual hrs)*Standard Rate
Labor Quantity Variance	(15,000-14,400)8
Labor Quantity Variance	4,800 Favourable

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