STANDARD COSTING – 8 points

Bulong Company manufactured 1,000 units of a special multi-layer breathable fabric with the trade name “walang
pakpak”. The following information from the “walang pakpak” production department for the month of May is as
follows:
Direct material purchased: 36,000 yards at 1.38 per yard 49,680
Direct material used: 19,000 yards at 1.38 per yard 26,220
Direct labor: 4,200 hours at 9.15 per hour 38,430

The standard prime costs of one unit of “walang pakpak” is as follows:

Direct material: 20 yards at 1.35 per yard 27
Direct labor used: 4 hours at 9.00 per hour 36
Total standard prime cost per unit of output 63

Required:
1. Materials spending variance
2. Direct material efficiency variance
3. Labor rate variance
4. Labor efficiency variance

(At this point, disregard the above data pertaining to Bulong Company.)
Assume that the standard production overhead costs per unit of “walang pakpak” are based on direct-labor hours
and are as follows:
Variable overhead (5 direct labor hours @ 12/DLH) 60
Fixed overhead (5 DLH @ 18/DLH) based on activity level of 300,000 DLH per month 90
Total overhead 150

The following information is available for the current month:

• Variable overhead costs were 3,510,000

• Fixed overhead costs were 5,625,000
• 56,000 switches were produced, although 60,000 switches were scheduled to be produced
• 275,000 direct labor hours were worked at a total cost of 3,825,000.

Required:
1. VOH Spending Variance
2. VOH Efficiency Variance
3. FOH Spending Variance
4. Volume Variance