Reference no: EM132549468

Question 1: BB Corporation uses material "A-B" to produce a product "Abab. The material is purchased in two-ton container at a cost of P50,000 per ton. A supplier offered a discount term of 5/10, n/30 and company normally takes all the discount. Shipping cost amounting to P10,000 is to be paid by BB Corporation for an average of ten 2-ton containers. Nineteen grams of materials "A-B" are needed to produce a product "Abab". About 6.25% of all materials purchased is rejected as unsuitable before being used. In addition, about 1 out 20 "Abab" is rejected at final inspection, due to defect of sort or another.

Required:

1. Compute the standard purchase price for one gram of "A-B"

2. Compute the standard quantity of "A-B" per unit of "Abab" that passes final inspection.

Question 2: Bataan Corporation has just developed a new product called Samat. Standard cost system was established to help control costs based on the ff standard materials and direct labor:

Direct materials: 40,000 diodes were purchased for use in production at a cost of P0.36 per diode. Some 3,000 of these diodes were still in inventory at the end of the month.

Direct labor: 8,200 direct labor hours were worked at a cost P67,240.

The company determines variances at the earliest possible time.

Required: Compute the following variances for June:

1. Direct materials price and usage variances.

2. Direct labor rate and efficiency variances.