Reference no: EM133075137
Questions -
Q1. The Standard manufacturing corporation uses a standard cost system in accounting for the cost of its only product. The standard cost per unit (based on 10,000 units production) was set up as follows: Direct materials, 10 kgs @ P11/kg.; Direct labor, 8 hours @ P50 per hour; Factory overhead, 8 hours @ P15 per hour. The following data on the operations appear in the company's record for the month of July: Units completed during the month, 8,000 units; units in process at the end of the month, with 100% materials but half completed, 1,000 units; Direct materials used, 95,000 kgs @ P10 per kg; Direct labor; P3,510,000 at a rate of P54; Actual overhead for the month P985,000. Compute for the Variable efficiency variance. Indicate whether favorable or unfavorable.
Q2. The following information refers to the Finishing Department of Tom Company for the fourth quarter:
Total actual Overhead 178,500
Budgeted Allowance Formula 110,000 plus 0.50 per direct labor hour
Predetermined factory overhead rate 1.50 per direct labor hour
Spending variance 8,000 unfavorable
Efficiency variance 9,000 unfavorable
The total factory overhead is divided into three variances - spending, idle capacity, and efficiency. Compute for the actual direct labor hours worked in the finishing department during the fourth quarter. Indicate if favorable or unfavorable.
Q3. Nato Company was organized a year ago. The results of the company's first year of operations using the absorption costing method follow: Sales (40,000 units @ P33.75) Cost of goods manufactured (50,000 units @ 21) P1,050,000.00 Ending Inventory (10,000 units @ 21) Selling & administrative expenses Net Operating Income P1,350,000.00 P 210,000.00 P 420,000.00 P 90,000.00 The company's selling and administrative expenses consists of P300,000 per year in fixed expenses and P3.00 per unit sold in variable expenses. The product cost of P21 is computed as follows: Direct materials - P10.00; Direct labor - P4.00; Variable manufacturing overhead - P2.00; Fixed manufacturing overhead (P250,000/50,000 units) -P5.00. Compute for the operating income under variable costing.