How much is Mooniyan's material mix variance? (Put a negative sign if the variance is favorable and round  off answer to the nearest peso

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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5. Additional information from given above, assume that Mooniyan Division was able to maximize its 
production of Sacred Hammer with the incurrence of following actual costs:
Material X (61,500 lbs) P 1,168,500
Iron Hook (38,500 pcs) ?
How much is Mooniyan's material mix variance? (Put a negative sign if the variance is favorable and round 
off answer to the nearest peso

 

Northern Vale is one of the divisions of Moonton Company. Northern Vale produces "Iron Hook" and can currently
sell 75% of its annual capacity to outside customers. Mooniyan Division, another division of Moonton Company,
developed "sacred hammer" which uses the "Iron Hook" as one of its direct materials plus another materials to be
purchased from outside suppliers. Mooniyan Division is working at full capacity and will require Northern Vale to
supply all the Iron Hooks that they need. All the divisions of Moonton Company uses standard costing and properly
controls the costs and computes for variances.
The standard cost in producing 1 unit of Iron Hook is as follows:
Direct material (2.2 lbs @ P10/lb.)
Php 22
Direct labor (4 dlh @ P6/dlh)
24
Factory overhead
30*
*30% fixed.
**Budgeted annual fixed cost is P900,000
The standard cost in producing 1 unit of Sacred Hammer is as follows:
Iron Hook (1pc @ P80)
Php 80
Material X (1.5 lbs @ P20/lb.)
30
Direct labor (0.5 dlh @ P36/dlh)
18
Variable Factory overhead
14
Fixed Factory overhead
12*
*Based on annual capacity of 40,000 units
Northern Vale currently sells the Iron Hook to outside customers at a mark-up of 10% on full standard cost while
Mooniyan was able to find a supplier of Iron Hook at P80.
Transcribed Image Text:Northern Vale is one of the divisions of Moonton Company. Northern Vale produces "Iron Hook" and can currently sell 75% of its annual capacity to outside customers. Mooniyan Division, another division of Moonton Company, developed "sacred hammer" which uses the "Iron Hook" as one of its direct materials plus another materials to be purchased from outside suppliers. Mooniyan Division is working at full capacity and will require Northern Vale to supply all the Iron Hooks that they need. All the divisions of Moonton Company uses standard costing and properly controls the costs and computes for variances. The standard cost in producing 1 unit of Iron Hook is as follows: Direct material (2.2 lbs @ P10/lb.) Php 22 Direct labor (4 dlh @ P6/dlh) 24 Factory overhead 30* *30% fixed. **Budgeted annual fixed cost is P900,000 The standard cost in producing 1 unit of Sacred Hammer is as follows: Iron Hook (1pc @ P80) Php 80 Material X (1.5 lbs @ P20/lb.) 30 Direct labor (0.5 dlh @ P36/dlh) 18 Variable Factory overhead 14 Fixed Factory overhead 12* *Based on annual capacity of 40,000 units Northern Vale currently sells the Iron Hook to outside customers at a mark-up of 10% on full standard cost while Mooniyan was able to find a supplier of Iron Hook at P80.
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