Silva Plastics Company has established standard cost for a unit of manufactured follows: as product Materials (3 kgs. @ P9) Labor (1 hour @ P84) Variable overhead (1 hour @ P24) Fixed overhead (1 hour @ P36) Total standard unit cost P27.00 84.00 24.00 36.00 P171.00 u pormal 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. Labor hours 58,000 Labor rate P90.00 per hour Factory overhead- Variable Fixed P1,380,000 P3,600,000 During the year, 60,000 units of product were put into production and were ompleted. 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 ае уear. EQUIRED: Determine the materials and labor variances graphically and by formula. Prepare the flexible overhead budget using the format of page 217. Determine the overhead variances using the 2-way method.

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
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Author:Don R. Hansen, Maryanne M. Mowen
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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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100%
Labor (1 hour @ P84)
in a year. Costs data pertaining to the operations for the year are summarized below:
Silva Plastics Company has established standard cost for a unit of manufactured
Materials (3 kgs. @ P9)
At normal operating capacity, 100,000 units of product should be manufactured
Variable overhead (1 hour @ P24)
Fixed overhead (1 hour @ P36)
a
product as follows:
P27.00
84.00
24.00
36.00
P171.00
Total standard unit cost
t normal operating capacity, 100,000 units of product should be manufactured
Materials purchased (200,000 kgs.)
Materials used in production
P1,908,000
185,000 kgs.
58,000
P90.00 per hour
P1,380,000
Labor hours
Labor rate
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:Labor (1 hour @ P84) in a year. Costs data pertaining to the operations for the year are summarized below: Silva Plastics Company has established standard cost for a unit of manufactured Materials (3 kgs. @ P9) At normal operating capacity, 100,000 units of product should be manufactured Variable overhead (1 hour @ P24) Fixed overhead (1 hour @ P36) a product as follows: P27.00 84.00 24.00 36.00 P171.00 Total standard unit cost t normal operating capacity, 100,000 units of product should be manufactured Materials purchased (200,000 kgs.) Materials used in production P1,908,000 185,000 kgs. 58,000 P90.00 per hour P1,380,000 Labor hours Labor rate 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.
Standard time for one pair
217
Flexible Overhead Budget
Normal
Normal
Rate/Hr.
Actual
Standard
Time
Time
Time
1.2 hrs.
x Normal production
x Actual production
1.2 hrs.
2,500 prs.
2,800 prs.
3,360
HOURS
3,000
3,200
Fixed overhead
Variable overhead
Total overhead
P10.00
P30,000
120,000
P150,000
P30,000
128,000
P158,000
P30,000
134,400
P164,400
40.00
P50.00
Transcribed Image Text:Standard time for one pair 217 Flexible Overhead Budget Normal Normal Rate/Hr. Actual Standard Time Time Time 1.2 hrs. x Normal production x Actual production 1.2 hrs. 2,500 prs. 2,800 prs. 3,360 HOURS 3,000 3,200 Fixed overhead Variable overhead Total overhead P10.00 P30,000 120,000 P150,000 P30,000 128,000 P158,000 P30,000 134,400 P164,400 40.00 P50.00
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