Case: Mercurial Company has made the following information available for its production facility for the current month. Fixed overhead was estimated at 22,000 machine hours for the production cycle. Actual machine hours for the period were 22,500; 4,200 units were produced.   Material purchased (107,000 pieces) P529,650   Material quantity variance P7,000 U Machine hours used (22,500 hours)     VOH spending variance P100 U Actual fixed overhead P81,000   Actual labor cost P60,300   Actual labor hours 8,500     Mercurial Company’s standard costs are as follows:   Direct material 25 pieces @ P5 per piece Direct labor 2.0 hours @ P7 per hour Variable overhead   (applied on a machine hour basis) 5.2 hours @ P3.00 per hour Fixed overhead   (applied on a machine hour basis) 5.2 hours @ P3.50 per hour   Determine the following items: m. applied fixed overhead n. fixed overhead spending variance o. volume variance

Question

Case:
Mercurial Company has made the following information available for its production facility for the current month. Fixed overhead was estimated at 22,000 machine hours for the production cycle. Actual machine hours for the period were 22,500; 4,200 units were produced.

 

Material purchased (107,000 pieces)

P529,650

 

Material quantity variance

P7,000

U

Machine hours used (22,500 hours)

 

 

VOH spending variance

P100

U

Actual fixed overhead

P81,000

 

Actual labor cost

P60,300

 

Actual labor hours

8,500

 

 

Mercurial Company’s standard costs are as follows:

 

Direct material

25 pieces @ P5 per piece

Direct labor

2.0 hours @ P7 per hour

Variable overhead

 

(applied on a machine hour basis)

5.2 hours @ P3.00 per hour

Fixed overhead

 

(applied on a machine hour basis)

5.2 hours @ P3.50 per hour

 

Determine the following items:

m. applied fixed overhead
n. fixed overhead spending variance
o. volume variance

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