FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question

Strategic Cost

The following information relates to a given department of Mervi Company for the first quarter of the year: Actual total overhead (fixed plus variable) P178,500 Budget formula: Total FOH Cost = P110,000 + PO.50/hr %3D Total overhead application rate P1.50 per hour Spending variance (from three-way analysis) P8,000 unfavorable Volume variance (from two-way analysis) P5,000 favorable Each unit takes 5 hours to manufacture and the selling price is P4.50 per unit. Based on the overhead budget formula, how many units must be sold to generate P30,000 more than total budgeted overhead costs? 55,000 27,500 70,000 35,000
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Transcribed Image Text:The following information relates to a given department of Mervi Company for the first quarter of the year: Actual total overhead (fixed plus variable) P178,500 Budget formula: Total FOH Cost = P110,000 + PO.50/hr %3D Total overhead application rate P1.50 per hour Spending variance (from three-way analysis) P8,000 unfavorable Volume variance (from two-way analysis) P5,000 favorable Each unit takes 5 hours to manufacture and the selling price is P4.50 per unit. Based on the overhead budget formula, how many units must be sold to generate P30,000 more than total budgeted overhead costs? 55,000 27,500 70,000 35,000
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Step 1 Calculation of contribution per unit:
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Step 2 Units to be sold to generate profit of P30,sa000.
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