Marissa Co., the consultant of Marisol Co. had summarized the following standard cost data extracted from the historical recordsa and performance reports issued by the cost accounting department in the prior year to assist in her analysis and evaluation of the standard costing policy of the company: Input required per unitStandard cost per unitStandard cost per unitDirect Materials6 kg per unitP90 per kgP540Direct Labor5 hrs per unitP50 per hrP250Other information follows:Budgeted factory overhead for the year:Variable480,000Fixed600,000The company's normal capacity per month is 400 unitsActual cost materia;s purchased for the year is P2,342,000During the year, direct materials purchased is 26,880 kg while direct materials actually used is 24,760 kgsActual labor costs for the year 1,080,000 of which 24,900 direct labor hours was consumedActual factory overhead amounted to 1,320,000, 65% of which is fixed cost, FOH is based on labor hoursActual production during the year 5,150 unitsCompute for Spending VarianceCompute for Variable Overhead Efficiency Variance Compute for Controllable Variance

Budgeted hours = normal capacity x budgeted hours per unit = 400 units x 5 hours x 12 months =…

Answered: Marissa Co., the consultant of Marisol…

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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Marissa Co., the consultant of Marisol Co. had summarized the following standard cost data extracted from the historical recordsa and performance reports issued by the cost accounting department in the prior year to assist in her analysis and evaluation of the standard costing policy of the company:

	Input required per unit	Standard cost per unit	Standard cost per unit
Direct Materials	6 kg per unit	P90 per kg	P540
Direct Labor	5 hrs per unit	P50 per hr	P250

Other information follows:

Budgeted factory overhead for the year:

Variable	480,000
Fixed	600,000

The company's normal capacity per month is 400 units
Actual cost materia;s purchased for the year is P2,342,000
During the year, direct materials purchased is 26,880 kg while direct materials actually used is 24,760 kgs
Actual labor costs for the year 1,080,000 of which 24,900 direct labor hours was consumed
Actual factory overhead amounted to 1,320,000, 65% of which is fixed cost, FOH is based on labor hours
Actual production during the year 5,150 units

Compute for Spending Variance

Compute for Variable Overhead Efficiency Variance

Compute for Controllable Variance

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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