Answer the following items on the space provided. Show your computations. At the beginning of 201A, ABC Company had the following standard costs for one (1) of its chemical products: Direct material (3 pounds at P3.20) P9.60 Labor standard (0.9 hours at P9.00) 8.10 Variable overhead (0.9 hours at P1.50) 1.35 Fixed overhead (0.9 hours at P4.00) 3.60 Total P22.65 ABC computes its overhead rates using budgeted capacity, which is 144,000 units. Actual results for 201A are: Units produced 140,000 units Materials purchased 421,175 lbs. at P3.30 Materials used 421,000 lbs. Direct labor 128,750 hrs at P8.90 Fixed overhead P517,525 Variable overhead 218,000 Required: Indicate whether conditions are favorable or unfavorable. 1. Material purchase price variance (MPPV) 2. Material price usage variance (MPUV) 3. Material quantity variance (MQV) 4. Labor rate variance (LRV) 5. Labor efficiency variance (LEV) 6. Variable overhead (VOH) rate variance 7. VOH efficiency variance 8. Fixed overhead (FOH) spending variance 9. FOH volume variance
I. PROBLEM SOLVING
Answer the following items on the space provided. Show your computations.
At the beginning of 201A, ABC Company had the following
Direct material (3 pounds at P3.20) P9.60
Labor standard (0.9 hours at P9.00) 8.10
Variable overhead (0.9 hours at P1.50) 1.35
Fixed overhead (0.9 hours at P4.00) 3.60
Total P22.65
ABC computes its overhead rates using budgeted capacity, which is 144,000 units. Actual results for 201A
are:
Units produced 140,000 units
Materials purchased 421,175 lbs. at P3.30
Materials used 421,000 lbs.
Direct labor 128,750 hrs at P8.90
Fixed overhead P517,525
Variable overhead 218,000
Required: Indicate whether conditions are favorable or unfavorable.
1. Material purchase price variance (MPPV)
2. Material price usage variance (MPUV)
3. Material quantity variance (MQV)
4. Labor rate variance (LRV)
5. Labor efficiency variance (LEV)
6. Variable overhead (VOH) rate variance
7. VOH efficiency variance
8. Fixed overhead (FOH) spending variance
9. FOH volume variance
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