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) Labor standard (0.9 hours at P9.00) Variable overhead (0.9 hours at P1.50) Fixed overhead (0.9 hours at P4.00) P9.60 8.10 1.35 3.60 P22.65 Total ABC computes its overhead rates using budgeted capacity, which is 144,000 units. Actual results for 201A are: Units produced Materials purchased Materials used 140,000 units 421,175 Ibs. at P3.30 421,000 lbs. 128,750 hrs at P8.90 Direct labor Fixed overhead Variable overhead P517,525 218,000
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) Labor standard (0.9 hours at P9.00) Variable overhead (0.9 hours at P1.50) Fixed overhead (0.9 hours at P4.00) P9.60 8.10 1.35 3.60 P22.65 Total ABC computes its overhead rates using budgeted capacity, which is 144,000 units. Actual results for 201A are: Units produced Materials purchased Materials used 140,000 units 421,175 Ibs. at P3.30 421,000 lbs. 128,750 hrs at P8.90 Direct labor Fixed overhead Variable overhead P517,525 218,000
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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- Fixed overhead spending variance
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Transcribed Image Text: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)
Labor standard (0.9 hours at P9.00)
Variable overhead (0.9 hours at P1.50)
Fixed overhead (0.9 hours at P4.00)
P9.60
8.10
1.35
3.60
P22.65
Total
ABC computes its overhead rates using budgeted capacity, which is 144,000 units. Actual results for 201A
are:
Units produced
Materials purchased
Materials used
Direct labor
Fixed overhead
Variable overhead
140,000 units
421,175 Ibs. at P3.30
421,000 lbs.
128,750 hrs at P8.90
P517,525
218,000
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