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1. Determine the materiáls 2. Prepare the flexible overhead budget using the format of page 217. 3. Determine the overhead variances using the 2-way method,

1. Determine the materiáls 2. Prepare the flexible overhead budget using the format of page 217. 3. Determine the overhead variances using the 2-way method,

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please help me to answer the required 3. I also uploaded the example format that was given to me. Thank you so much.

Exercise 6-14 Silva Plastics Company has established standard cost for a unit of manufactured product as follows: Materials (3 kgs. @ P9) Labor (1 hour @ P84) Variable overhead (1 hour @ P24) Fixed overhead (1 hour @ P36) P27.00 84.00 24.00 36.00 Total standard unit cost P171.00 At normal operating capacity, 100,000 units of product should be manufactured in a year. Costs data pertaining to the operations for the year are summarized below: Materials purchased (200,000 kgs.) Materials used in production P1,908,000 185,000 kgs. 58,000 P90.00 per Labor hours hour Labor rate P1,380,000 Factory overhead- Variable Fixed P3,600,000 During the year, 60,000 units of product were put into production and were completed. There were no units in process at the beginning or at the end of the year. There are also no inventories of raw materials or finished goods at the beginning of the year. REQUIRED: 1. Determine the materials and labor variances graphically and by formula, 2. Prepare the flexible overhead budget using the format of page 217. 3. Determine the overhead variances using the 2-way method.
Transcribed Image Text:Exercise 6-14 Silva Plastics Company has established standard cost for a unit of manufactured product as follows: Materials (3 kgs. @ P9) Labor (1 hour @ P84) Variable overhead (1 hour @ P24) Fixed overhead (1 hour @ P36) P27.00 84.00 24.00 36.00 Total standard unit cost P171.00 At normal operating capacity, 100,000 units of product should be manufactured in a year. Costs data pertaining to the operations for the year are summarized below: Materials purchased (200,000 kgs.) Materials used in production P1,908,000 185,000 kgs. 58,000 P90.00 per Labor hours hour Labor rate P1,380,000 Factory overhead- Variable Fixed P3,600,000 During the year, 60,000 units of product were put into production and were completed. There were no units in process at the beginning or at the end of the year. There are also no inventories of raw materials or finished goods at the beginning of the year. REQUIRED: 1. Determine the materials and labor variances graphically and by formula, 2. Prepare the flexible overhead budget using the format of page 217. 3. Determine the overhead variances using the 2-way method.
2. Controllable variance 1. Uncontrollable variance 2-Way Overhead Variance Analysis Less: Budgeted overhead, standard time Uncontrollable variance Standard time Less: Normal time Time saved y Normal fixed overhead rate 3,360 hrs. 3,000 hrs. 360 hrs. P10 P3,600 F* Actual overhead P160,000 164,400 4,400 F** P8.000 F Total variance P2,000 F **Spending variance *Capacity variance P2,000 U 1,600 F P3,600 F Variable efficiency variance 6,400 F Total Total P4,400 F
Transcribed Image Text:2. Controllable variance 1. Uncontrollable variance 2-Way Overhead Variance Analysis Less: Budgeted overhead, standard time Uncontrollable variance Standard time Less: Normal time Time saved y Normal fixed overhead rate 3,360 hrs. 3,000 hrs. 360 hrs. P10 P3,600 F* Actual overhead P160,000 164,400 4,400 F** P8.000 F Total variance P2,000 F **Spending variance *Capacity variance P2,000 U 1,600 F P3,600 F Variable efficiency variance 6,400 F Total Total P4,400 F
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