ASM Company makes a cologne called Allure. The standard cost for one bottle of Allure is as follows: Standard Manufacturing Cost Elements    Quantity x  Price =   Cost Direct materials 6 oz. x P0.90 = P 5.40 Direct labor 0.5 hrs. x P12.00 = P 6.00 Manufacturing overhead 0.5 hrs. x P 4.80 = P 2.40    P13.80 During the month, the following transactions occurred in manufacturing 10,000 bottles of Allure: 1. 58,000 ounces of materials were purchased at P1.00 per ounce. 2. All the materials purchased were used to produce the 10,000 bottles of Allure. 3. 4,900 direct labor hours were worked at a total labor cost of P56,350. 4. Variable manufacturing overhead incurred was P15,000 and fixed overhead incurred was P10,400. The manufacturing overhead rate of P4.80 is based on a normal capacity of 5,200 direct labor hours. The total budget at this capacity is P10,400 fixed and P14,560 variable. Instructions: (a) Compute the total variance and the variances for direct materials and direct labor elements. (b) Compute the total variance for manufacturing overhead

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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ASM Company makes a cologne called Allure. The standard cost for one bottle of Allure is as follows:

Standard

Manufacturing Cost Elements    Quantity x  Price =   Cost

Direct materials 6 oz. x P0.90 = P 5.40

Direct labor 0.5 hrs. x P12.00 = P 6.00

Manufacturing overhead 0.5 hrs. x P 4.80 = P 2.40

   P13.80

During the month, the following transactions occurred in manufacturing 10,000 bottles of Allure:

1. 58,000 ounces of materials were purchased at P1.00 per ounce.

2. All the materials purchased were used to produce the 10,000 bottles of Allure.

3. 4,900 direct labor hours were worked at a total labor cost of P56,350.

4. Variable manufacturing overhead incurred was P15,000 and fixed overhead incurred was P10,400. The manufacturing overhead rate of P4.80 is based on a normal capacity of 5,200 direct labor hours. The total budget at this capacity is P10,400 fixed and P14,560 variable.

Instructions:

(a) Compute the total variance and the variances for direct materials and direct labor elements.

(b) Compute the total variance for manufacturing overhead.  

 

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