PECASALES, NINA SHRINE A.

P14-1
Geneva Corporation uses a standard cost system and produces a single product with REQUIRED #1 REQUIRED #2 REQUIRED #3
standard costs as follows: DIRECT MATERIALS VARIANCE
Actual price ₱10.50 a. Raw materials ₱95,000.00 - (9,500 pounds x P10) Sales (1,500 units x P500) ₱750,000.00
Direct materials 5 pounds at P10.00 ₱50.00 Less: Standard price ₱10.00 Materials price variance ₱4,750.00 Less: Cost pf goods sold - actual
Direct Labor 2 hours at P40.00 ₱80.00 Difference in price ₱0.50 Accounts payable ₱99,750.00 - ( 9,500 x P10.50) Cost of goods sold - standard
Variable overhead 2 hours at P30.00 ₱60.00 x Actual quantity purchased 9,500 Direct materials - standard (9,200 x P10) ₱92,000.00
Fixed overhead 2 hours at P15.00 ₱30.00 a. Materials price variance ₱4,750.00 UNFAVORABLE b. Work in process ₱90,000.00 - (1,800 units x 5lbs x P10) Direct labor - standard (3,700 x P40) ₱148,000.00
Total unit cost ₱220.00 Materials quantity variance ₱2,000.00 Variable overhead cost - standard ( 1,500 x P60) ₱90,000.00
Actual quantity used 9,200 Raw materials ₱92,000.00 - (9,200lbs x P10) Fixed overhead cost - standard ( 1,500 x P30) ₱45,000.00 ₱375,000.00
There were no beginning inventories. During the month 1,800 units were manufactured Standard quantity ( 1,800 x 5) 9,000 Standard cost variances
and 1,500 units were sold at a sales price of P500.00 each. Overhead rates are based Difference in quantity 200 c. Payroll ₱150,960.00 - ( 3,700 x P40.80) Materials price variance ₱4,750.00
on 2,000 units per month or 4,000 standard direct labor hours. Overhead is applied on
the basis of direct labor hours. x Standard price per wood ₱10.00 Accrued payroll ₱150,960.00 Materials quantity variance ₱2,000.00
b. Materials price variance ₱2,000.00 UNFAVORABLE Labor rate variance ₱2,960.00
Actual results for the month were as follows: d. Work in process ₱144,000.00 - ( 3,600 x P40) Labor efficiency variance ₱4,000.00
Direct materials purchased 9,500 pounds at P10.50 Total direct materials variance - unfavorable ₱6,750.00 UNFAVORABLE Labor rate variance ₱2,960.00 Variable overhead spending variance -₱1,000.00
Direct materials used 9,200 pounds Labor efficiency variance ₱4,000.00 Fixed overhead spending variance ₱5,000.00
Direct labor used 3,700 hours at P40.80 DIRECT LABOR VARIANCE Payroll ₱150,960.00 Variable overhead efficiency variance ₱3,000.00
Variable overhead cost incurred P110,000 Actual rate ₱40.80 Overhead volume variance ₱6,000.00 ₱26,710.00 ₱401,710.00
Fixed overhead cost incurred P65,000 Less: Standard price ₱40.00 e. Factory overhead control - v ₱110,000.00 GROSS PROFIT ₱348,290.00
Difference in rate ₱0.80 UNFAVORABLE Factory overhead control - f ₱65,000.00
REQUIRED: x Actual direct labor hours 3,700 Various accounts ₱175,000.00
1. Calculate the following and indicate if each variance is favorable or unfavorable. c. Direct labor rate variance ₱2,960.00
a. Material price variance based on quantity purchased f. Work in process ₱108,000.00
b. Material quantity variance Actual direct labor hours 3,700 Applied factory overhead - v ₱108,000.00
c. Direct labor rate variance Standard quantity ( 1,800 x 2) 3,600
d. Direct labor effeciency variance Difference in hours 100 UNFAVORABLE g. Work in process ₱54,000.00
e. Total overhead variance x Standard rate per hour ₱40.00 Applied factory overhead - f ₱54,000.00
f. Variable overhead spending variance d. Direct labor effeciency variance ₱4,000.00
g. Variable overhead efficiency variance h. Applied factory overhead - v ₱108,000.00
h. Fixed overhead spending variance Total direct materials variance - unfavorable ₱6,960.00 UNFAVORABLE Variable overhead efficiency variance ₱3,000.00
i. Production volume variance Factory overhead control - v ₱110,000.00
Variable overhead spending variance ₱1,000.00
2. Prepare the necessary journal entries to record the following: FACTORY OVERHEAD VARIANCE
Total at 4,000 Overhead rate
a. Purchase of materials hours per hour i. Applied factory overhead - f ₱54,000.00
b. Issuance of materials to production Fixed ₱60,000 ₱15 Fixed overhead spending variance ₱5,000.00
c. To accrue payroll Variable (4,000 hours x P30) ₱120,000 ₱30 Factory overhead volume variance ₱6,000.00
d. To distribute payroll ₱180,000.00 ₱45.00 Factory overhead control -f ₱65,000.00
e. Incurrence of actual variable and fixed overhead costs
f. Applied variable overhead FOUR-VARIANCE ANALYSIS
g. Applied fixed overhead
h. Variable overhead variances Variable overhead:
i. Fixed overhead variances Actual variable overhead ₱110,000.00
Less: Budget variable overhead (3,700 X P30) ₱111,000.00
3. Calculate the gross profit based on standard costs f. Variable overhead spending variance -₱1,000.00 FAVORABLE

Budget variable overhead ₱111,000.00

Less: Applied variable overhead (3,600 x P30) ₱108,000.00
g. Variable overhead efficiency variance ₱3,000.00 UNFAVORABLE

Total variable overhead variance ₱2,000.00 UNFAVORABLE

Fixed overhead:
Actual fixed overhead ₱65,000.00
Less: Budget fixed overhead at normal capacity
(4,000 x P15) ₱60,000.00
h. Fixed overhead spending variance ₱5,000.00 UNFAVORABLE

Budget fixed overhead at normal capacity ₱60,000.00

Less: Actual fixed overhead (3,600 x P15) ₱54,000.00
Production volume variance ₱6,000.00 UNFAVORABLE

i. Total variable overhead variance ₱11,000.00 UNFAVORABLE

e. Total overhead variance ₱13,000.00 UNFAVORABLE

PECASALES, NINA SHRINE A.

P14-2

Copenhangen Company manufactures furniture and uses a standard cost system for
its production process. It applies overhead based on direct labor hours.
A. ONE- VARIANCE ANALYSIS
Standad: Actual factory overhead (430,000 + 900,000) ₱1,330,000.00
DLH per unit ₱10.00 Standard Overhead (3,100 x 10 x 12) + (3,100 x 10 x 30) -₱1,302,000.00
Variable overhead per DLH ₱12.00 Total overhead variance ₱28,000.00 UNFAVORABLE
Fixed overhead per DLH ₱30.00
Budgeted variable overhead ₱50,000.00 B. TWO-VARIANCE ANALYSIS
Budgeted fixed overhead ₱80,000.00 Actual factory overhead (430,000 + 900,000) ₱1,330,000.00
Less: Budgeted allowed on standard hours
Actual: Variable (3,100 x 10 x 12) ₱372,000.00
Units produced 3,100 Budgeted fixed cost ₱80,000.00 ₱452,000.00
Direct labor hours 24,000 Controllable variance ₱878,000.00 UNFAVORABLE
Variable overhead ₱430,000.00
Fixed overhead ₱900,000.00 Budgeted allowed on standard hours ₱452,000.00
Less: Standard Overhead (3,100 x 10 x 12) + (3,100 x 10 x 30) -₱1,302,000.00
REQUIRED: Compute the overhead variances using the following: Uncontrollable variance -₱850,000.00 FAVORABLE
a. One-variance analysis
b. Two-variance analysis Total overhead variance ₱28,000.00 UNFAVORABLE
c. Three-variance analysis
d. Four-variance analysis C. THREE-VARIANCE ANALYSIS
Actual factory overhead (430,000 + 900,000) ₱1,330,000.00
Less: Budgeted allowed on actual hours
Fixed ₱80,000.00
Variable (24,000 x 12) ₱288,000.00 ₱368,000.00
Spending variance ₱962,000.00 UNFAVORABLE

Budgeted allowed on actual hours ₱368,000.00

Less: Budgeted allowed on standard hours
Variable (3,100 x 10 x 12) ₱372,000.00
Budgeted fixed overhead cost ₱80,000.00 ₱452,000.00
Variable efficiency variance -₱84,000.00 FAVORABLE

Budgeted allowed on standard hours ₱452,000.00

Less: Standard Overhead (3,100 x 10 x 12) + (3,100 x 10 x 30) -₱1,302,000.00
 Volume variance -₱850,000.00 FAVORABLE

Total overhead variance ₱28,000.00 UNFAVORABLE

D. FOUR-VARIANCE ANALYSIS
Actual overhead overhead ₱430,000.00
Less: Budget variable overhead (24,000 x 12) -₱288,000.00
Variable overhead spending variance ₱142,000.00 UNFAVORABLE

Actual fixed overhead ₱900,000.00

Less: Budgeted fixed overhead ₱80,000.00
Fixed overhead spending variance ₱820,000.00 UNFAVORABLE

Budgeted on actual hours ₱368,000.00

Less: Budgeted on Standard hours
Variable ₱372,000.00
Budgeted fixed costs ₱80,000.00 ₱452,000.00
Efficiency variance -₱84,000.00 FAVORABLE

Budgeted allowed on standard hours ₱452,000.00

Less: Standard Overhead (3,100 x 10 x 12) + (3,100 x 10 x 30) -₱1,302,000.00
Volume variance -₱850,000.00 FAVORABLE

Total overhead variance ₱28,000.00 UNFAVORABLE

PECASALES, NINA SHRINE A.

P14-3

Sweden Company uses standard cost system and gathered the following information for the period
ended October 31, 2015:

Direct labor
Amount hours Overhead rate REQUIRED:
Budgeted Variable overhead:
Variable overhead ₱600,000 25,000 ₱24.00 Actual variable overhead ₱588,800.00
Fixed overhead ₱800,000 25,000 ₱32.00 Less: Budget variable overhead (23,000 X P24) ₱552,000.00
Total ₱1,400,000 ₱56.00 a. Variable overhead spending variance ₱36,800.00 UNAVORABLE

Actual Budget variable overhead ₱552,000.00

Variable overhead ₱588,800 23,000 ₱25.60 Less: Applied variable overhead (23,000 x P24) ₱552,000.00
Fixed overhead ₱791,200 23,000 ₱34.40 Variable overhead efficiency variance ₱0.00
Total ₱1,380,000 ₱60.00
Total variable overhead variance ₱36,800.00 UNFAVORABLE
REQUIRED: Compute the following:
a. Variable overhead spending variance Fixed overhead:
b. Fixed overhead spending variance Actual fixed overhead ₱791,200.00
c. Idle capacity variance Less: Budget fixed overhead at normal capacity ₱800,000.00
d. Overall factory overhead variance b. Fixed overhead spending variance -₱8,800.00 FAVORABLE

Budget fixed overhead at normal capacity ₱800,000.00

Less: Actual fixed overhead (23,000 x P32) ₱736,000.00
c. Idle capacity variance ₱64,000.00 UNFAVORABLE

Total variable overhead variance ₱55,200.00 UNFAVORABLE

d. Overall factory overhead variance ₱92,000.00 UNFAVORABLE

Total actual factory overhead (588,800 + 791,200) ₱1,380,000.00

Total applied factory overhead
Applied variable overhead ( 23,000 x P24) ₱552,000.00
Applied fixed overhead (23,000 x P32) ₱736,000.00 ₱1,288,000.00
Total overhead variance ₱92,000.00 UNFAVORABLE