ABC Company has established standard costs for the furniture department, in which one (1) size of the cabinet is made. The standard costs of producing one (1) of these cabinets are shown below: Direct material (Lumber) 50 board feet at P4.00 per foot Labor standard P200.00 8 hours at P10.00 per hour Variable overhead 80.00 8 hours at P5.00 per hour 40.00 Fixed overhead 8 hours at P3.00 per hour 24.00 P344.00 Total During January 201A, 500 cabinets were produced. The actual cost of operations during the month are shown below: Direct materials purchased (30,000 board feet at P4.10 per board foot) Direct materials used (24,000 board feet) Direct labor (4,200 hours at P9.50 per hour) Total variable overhead cost P123,000 39,900 22,000 11,000 Total fixed overhead cost The budgeted overhead for the furniture department based on a normal monthly activity of 4,500 hours is P36.000, of which P22.500 is variable and P13.500 is fixed overhead.

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
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Chapter4: Job Order Costing
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Problem 2PB: Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500...
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  1. Fixed overhead spending variance
  2. fixed overhead volume variance
ABC Company has established standard costs for the furniture department, in which one (1) size of the cabinet
is made. The standard costs of producing one (1) of these cabinets are shown below:
Direct material (Lumber)
50 board feet at P4.00 per foot
P200.00
Labor standard
8 hours at P10.00 per hour
80.00
Variable overhead
8 hours at P5.00 per hour
40.00
Fixed overhead
8 hours at P3.00 per hour
Total
24.00
P344.00
During January 201A, 500 cabinets were produced. The actual cost of operations during the month are shown
below:
Direct materials purchased (30,000 board
feet at P4.10 per board foot)
Direct materials used (24,000 board feet)
Direct labor (4,200 hours at P9.50 per hour)
P123,000
39,900
Total variable overhead cost
22,000
Total fixed overhead cost
11,000
The budgeted overhead for the furniture department based on a normal monthly activity of 4,500 hours is
P36,000, of which P22,500 is variable and P13,500 is fixed overhead.
Transcribed Image Text:ABC Company has established standard costs for the furniture department, in which one (1) size of the cabinet is made. The standard costs of producing one (1) of these cabinets are shown below: Direct material (Lumber) 50 board feet at P4.00 per foot P200.00 Labor standard 8 hours at P10.00 per hour 80.00 Variable overhead 8 hours at P5.00 per hour 40.00 Fixed overhead 8 hours at P3.00 per hour Total 24.00 P344.00 During January 201A, 500 cabinets were produced. The actual cost of operations during the month are shown below: Direct materials purchased (30,000 board feet at P4.10 per board foot) Direct materials used (24,000 board feet) Direct labor (4,200 hours at P9.50 per hour) P123,000 39,900 Total variable overhead cost 22,000 Total fixed overhead cost 11,000 The budgeted overhead for the furniture department based on a normal monthly activity of 4,500 hours is P36,000, of which P22,500 is variable and P13,500 is fixed overhead.
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