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Costcon - Assignment 24

Weslaco Company provided production information for the current month including actual machine hours, units produced, material purchased, variances, and overhead amounts. Standard costs were also provided for direct material, direct labor, variable overhead and fixed overhead. Various variances and standard amounts were calculated including: a material purchase price variance of P6,000 unfavorable, standard cost of material allowed of P312,000, a labor rate variance of P4,720 unfavorable, a labor efficiency variance of P300 unfavorable, variable overhead efficiency variance of P450 unfavorable, fixed overhead spending variance of P3,000 unfavorable, volume variance of P840 unfavorable, and total overhead variance of P

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Andree Perea
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42 views3 pages

Costcon - Assignment 24

Weslaco Company provided production information for the current month including actual machine hours, units produced, material purchased, variances, and overhead amounts. Standard costs were also provided for direct material, direct labor, variable overhead and fixed overhead. Various variances and standard amounts were calculated including: a material purchase price variance of P6,000 unfavorable, standard cost of material allowed of P312,000, a labor rate variance of P4,720 unfavorable, a labor efficiency variance of P300 unfavorable, variable overhead efficiency variance of P450 unfavorable, fixed overhead spending variance of P3,000 unfavorable, volume variance of P840 unfavorable, and total overhead variance of P

Uploaded by

Andree Perea
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© © All Rights Reserved
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Costcon

Assignment 24

Weslaco Company has made the following information available for its production facility for the
current month. Fixed overhead was estimated at 19,000 machine hours for the production cycle.
Actual machine hours for the period were 18,900, which generated 3,900 units.
 

Material purchased (80,000 pieces) P314,000  

Material quantity variance P6,400 U

Machine hours used (18,900 hours)    

VOH spending variance P50 U

Actual fixed overhead P60,000  

Actual labor cost P40,120  

Actual labor hours 5,900  

Weslaco Company’s standard costs are as follows:


 

Direct material 20 pieces @ P4 per piece

Direct labor 1.5 hours @ P6 per hour

Variable overhead  

   (applied on a machine hour basis) 4.8 hours @ P2.50 per hour

Fixed overhead  

   (applied on a machine hour basis) 4.8 hours @ P3 per hour

Determine the following items:

a. material purchase price variance

b. standard quantity allowed for material

c. total standard cost of material allowed

d. actual quantity of material used

e. labor rate variance


f. standard hours allowed for labor

g. total standard cost of labor allowed

h. labor efficiency variance

i. actual variable overhead incurred

j. standard machine hours allowed

k. variable overhead efficiency variance

l. budgeted fixed overhead

m. applied fixed overhead

n. fixed overhead spending variance

o. volume variance

p. total overhead variance

Answers:

a. actual material cost                                                     P314,000


    actual pieces at standard cost (80,000 ' P4)               320,000
    material purchase variance                                             P6,000
b. 3,900 units ' 20 pieces per unit                                 P78,000 standard quantity allowed
c. total standard cost of material (78,000 ' P4)            P312,000
d. standard cost of material used
    P312,000 + P6,400                                                    P318,400 / P4
    actual pieces used                                                         P79,600
e. actual labor cost                                                          P40,120
    5,900 actual DLHs ' P6                                                 35,400
    labor rate variance                                                         P4,720 U       
f.  3,900 units ' 1.5 standard hours per unit                  5,850 SHA
g.  5,850 SHA ' P6                                                            P35,100  total standard cost of
labor allowed   
h. actual hours ' standard rate (from e)                           P35,400
    standard cost of labor allowed (from g)                        35,100
    labor efficiency variance                                               P300 U
i. actual machine hours ' standard VOH rate
   (18,900 ' P2.50)                                                             P47,250
   VOH spending variance                                                         50 U
    actual VOH                                                                   P47,300   
j. 3,900 units ' 4.8 standard hours per unit                 18,720 MH allowed
k. standard hours allowed (from j) '
    standard VOH rate
    (18,720 ' P2.50)                                                         P46,800
    actual machine hours ' standard rate (from i)
    (18,900 ' P2.50)                                                           47,250
    variable overhead efficiency variance                       P450 U     
l. 19,000 machine hours ' P3.00                                 P57,000
m. 3,900 units ' 4.8 hours per unit ' P3.00                P56,160
n.  actual fixed overhead                                             P60,000
     budgeted fixed overhead (from l)                            57,000
     fixed overhead spending variance                         P3,000 U     
o.  budgeted fixed overhead (from l)                          P57,000
     applied fixed overhead (from m)                              56,160
     volume variance                                                       P840 U
p. total actual overhead
    P60,000 + P47,300 (from i)                                     P107,300
    total applied overhead
    (18,720 SHA ' P5.50)                                                  102,960
    total overhead variance                                              P4,340
                          
    

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