Accounting 106 – Cost Accounting and Cost Management
STANDARD COSTING:
I. ABC Company has the following information available for the current year:
Standard:
Material 3.5 feet per unit @ P2.60 per foot
Labor 5 direct labor hours @ P8.50 per unit
Actual:
Material 95,625 feet used (100,000 feet purchased @ P2.50 per foot)
Labor 122,400 direct labor hours incurred per unit @ P8.35 per hour
25,500 units were produced
1. Compute the material price and quantity variances.
2. Compute the labor rate and efficiency variances.
II. The Hawaii Co. has made the following information available for its production facility for June
2001. 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
Hawaii’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