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REQUIRED: 1. Determine the materials and labor variances graphically and by formula. 2. Prepare the flexible overhead budget using the format of page 217. the ? way method

REQUIRED: 1. Determine the materials and labor variances graphically and by formula. 2. Prepare the flexible overhead budget using the format of page 217. the ? way method

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter11: Performance Evaluation And Decentralization
Section: Chapter Questions
Problem 36E: (Appendix 11A) Cycle Time and Velocity Prakesh Company has the following data for one of its...
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Please help me to answer the required 1 of Graphical Approach for Material Variances. I also uploaded the example illustration that was given to me. Thank you so much.

Graphical Approach To facilitate the material and labor variance analysis, we will use the graphical approach (using quadrant 1). To make the visual aids, the following factors will be computed first: 1. Actual materials price (P422,400/4,400 yards) 2. Standard materials price P96.00 per yard 100.00 per yard 4,400 yards 3. Actual quantity used up 4. Standard quantity for one pair is 1-1/2 yards, so. for 2,800 pairs actually completed (2,800 x 1-1/2) is 4,200 yards P100 S Area 1 P96 A Area2 4.200 4,400 yards S A Area 1: Materials price variance (P4 x 4,200 yards) Area 2: Materials quantity variance (P96 x 200 yards) P16,800 F 19,200 U P2,400 U Total variance To countercheck: Total actual material cost (P96 x 4,400 yards) Less: Total standard material cost (P100 x 4,200 yards) P422,400 420.000 P2,400 U Overall variance Graphical Approach for Material Variances
Transcribed Image Text:Graphical Approach To facilitate the material and labor variance analysis, we will use the graphical approach (using quadrant 1). To make the visual aids, the following factors will be computed first: 1. Actual materials price (P422,400/4,400 yards) 2. Standard materials price P96.00 per yard 100.00 per yard 4,400 yards 3. Actual quantity used up 4. Standard quantity for one pair is 1-1/2 yards, so. for 2,800 pairs actually completed (2,800 x 1-1/2) is 4,200 yards P100 S Area 1 P96 A Area2 4.200 4,400 yards S A Area 1: Materials price variance (P4 x 4,200 yards) Area 2: Materials quantity variance (P96 x 200 yards) P16,800 F 19,200 U P2,400 U Total variance To countercheck: Total actual material cost (P96 x 4,400 yards) Less: Total standard material cost (P100 x 4,200 yards) P422,400 420.000 P2,400 U Overall variance Graphical Approach for Material Variances
Exercise 6-14 Silva Plastics Company has established standard cost for a unit of manufactured product as follows: Materials (3 kgs. @ P9) Labor (1 hour @ P84) Variable overhead (1 hour @ P24) Fixed overhead (1 hour @ P36) P27.00 84.00 24.00 36.00 Total standard unit cost P171.00 At normal operating capacity, 100,000 units of product should be manufactured in a year. Costs data pertaining to the operations for the year are summarized below: Materials purchased (200,000 kgs.) Materials used in production P1,908,000 185,000 kgs. 58,000 P90.00 per Labor hours hour Labor rate P1,380,000 Factory overhead- Variable Fixed P3,600,000 During the year, 60,000 units of product were put into production and were completed. There were no units in process at the beginning or at the end of the year. There are also no inventories of raw materials or finished goods at the beginning of the year. REQUIRED: 1. Determine the materials and labor variances graphically and by formula, 2. Prepare the flexible overhead budget using the format of page 217. 3. Determine the overhead variances using the 2-way method.
Transcribed Image Text:Exercise 6-14 Silva Plastics Company has established standard cost for a unit of manufactured product as follows: Materials (3 kgs. @ P9) Labor (1 hour @ P84) Variable overhead (1 hour @ P24) Fixed overhead (1 hour @ P36) P27.00 84.00 24.00 36.00 Total standard unit cost P171.00 At normal operating capacity, 100,000 units of product should be manufactured in a year. Costs data pertaining to the operations for the year are summarized below: Materials purchased (200,000 kgs.) Materials used in production P1,908,000 185,000 kgs. 58,000 P90.00 per Labor hours hour Labor rate P1,380,000 Factory overhead- Variable Fixed P3,600,000 During the year, 60,000 units of product were put into production and were completed. There were no units in process at the beginning or at the end of the year. There are also no inventories of raw materials or finished goods at the beginning of the year. REQUIRED: 1. Determine the materials and labor variances graphically and by formula, 2. Prepare the flexible overhead budget using the format of page 217. 3. Determine the overhead variances using the 2-way method.
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