Reference no: EM132549305

The Boogie Company's job costing system has two direct cost categories - direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of standard direct manufacturing labor-hours (DLH). At the beginning, Boogie adopted the following standards for its manufacturing costs:

                             Input Costs                    Output Unit

Direct materials          3 lbs. at P5.00 per            lb. P 15.00

Direct manufacturing labor  5 hrs. at P15.00 per       lb. 75.00

Manufacturing overhead:

Variable                        P6.00 per                      DLH 30.00

Fixed                           P8.00 per                     DLH 40.00

Standard manufacturing cost per output unit P160.00

• The denominator level for total manufacturing overhead per month in 2008 is 40,000 direct manufacturing labor hours. Boogie's flexible budget for January 2008 was based on this denominator level. The records for January indicated the following:

Direct materials purchased 25,000 lbs. at P5.20 per lb.

Direct materials used 23,100 lbs.

Direct manufacturing labor 40,100 hrs. at P14.000 per hr.

Total actual manufacturing (variable and fixed) P600,000

Actual Production 7,800 output units

Required:

Question 1. Prepare a schedule of total standard manufacturing costs for 7,800 output units in January 2008.

Question 2. For the month of January 2006, compute the following variances, indicating whether each is unfavorable or favorable;

a. Direct materials price variance based on production.

b. Direct materials efficiency variance.

c. Direct manufacturing labor price variance.

d. Direct manufacturing labor efficiency variance.

e. Total manufacturing overhead spending variance.

f. Variable manufacturing overhead efficiency variance.

g. Output level (production volume) variance.