PROBLEM 3

1. Controllable variances and volume variance

ANSWER:
Actual factory overhead (39,000 + 29,000) P68,000
Less: Budget allowed on standard hours
Fixed (24,000 x 15/60 = 6,000 x 5) P30,000
Variable (25,000 x 15/60 = 6,250 x 6) P37,500
P67,500
Controllable variance P500
UF

Budget allowed on standard hours P67,500

Less Standard factory overhead
(25,000 x 15/60 = 6,250 hrs. x P11) P68,750
Volume variance P (1250) F

2. Spending variance, variable efficiency variance and volume variance.

ANSWER:
Actual factory overhead 68,000
Less: budget allowed on actual hours
Fixed variable P30,000
(24,000 x 15/60 =6,000 x P6) P36,000 66,000
Variable efficiency P 2,000 UF

BAAH 66,000
Less: BASH 67,500
Volume var (900) F

BASH 67,500
Less: SH x SR 68,750 (1,250) F
Net Overhead variance P150 UF

3. Budget variance, capacity variance, and efficiency variance.

ANSWER:
AFOH P68,000
Less: BAAH P68,400 P (400) F
Capacity variance
BAAH P68,400
Less: Actual hrs. x std OH rate
(6,400 x P11) P70,400 P (2000) F
Efficiency variance
Actual Hrs. x Standard OH rate P70,400
Less: Standard hrs. x standard rate
 (6,250 x P 11) P68,750 1,650 UF
Net OH variance P (750) F

4. Spending variance, variable efficiency variance, idle capacity variance, and

fixed efficiency variance.

ANSWERS:
Spending Variance
AFOH 68,000
Less: BAAH 68,400 (P 400) F
Variable efficiency variance
BAAH 68,400
Less: BASH 67,500 900 UF
Idle Capacity Variance
BAAH 68,400
Less: Actual Hrs. x Standard OH rate 70,400 (2000) F
Fixed Efficiency Variance
Actual Hrs. 6,400 hrs.
Less: Standard Hrs. 6,250hrs
Efficiency in HRS 150 UF
X Fixed OH rate P5
750
UF
Net Overhead Variance (P750) F

MULTIPLE:
1.) D. P10,950 unfavorable
2.) B. P7,500 unfavorable
3.) A. P3,450 unfavorable
4.) A. 1.25
5.) C. 60,000
6.) A. 15,000 unfavorable
7.) A. 0
8.) C. 6,375 favorable
9.) D. Composed of rate variance only
10.) D. 7,000 favorable
11.) A. 750 unfavorable
12.) C. 1,000 favorable
13.) B. 1,780 unfavorable
14.) D. 4,220 favorable
15.) B. Unfavorable
16.) C. P21,680 unfavorable
17.) D. P4, 680 unfavorable
18.) C. P10, 920 favorable
19.) A. P15,600 unfavorable
20.) B. P17,000 unfavorable
21.) D. P25, 000 unfavorable
22.) A. P8, 000 unfavorable
23.) C. P29,680 unfavorable
24.) B. P14,080 unfavorable
25.) A. The variable efficiency variance of P15,600 unfavorable
26.) C.
27.) D.
28.) B.
29.) B.
30.) A.
31.) B.
32.) C.
33.) A.
34.) D.
35.) B.