Calculate the material and labor variances

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Question - The normal capacity of the Malloy Company is 20,000 direct labor hours and 10,000 units per month.  A finished unit requires 15 pounds of materials at an estimated cost of P1.00 per pound.  The estimated cost of labor is P12.00 per hour.  It is estimated that overhead for a month will be P15,000.

During the month of June, 19,000 direct labor hours were worked at an average rate of P11.50 an hour. The number of units produced was 9,000, using 132,000 pounds of material at a cost of P1.05 per pound.

Required - Calculate the material and labor variances. Indicate if it is favorable or unfavorable and explain.

Reference no: EM133089723

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