Drifblim Fine Furniture Inc Drifblim Fine Furniture Inc manufactures house decors. Brass sculptures are its best seller. The normal selling price of a piece of sculpture is P3,000. Drifblim has total assets amounting to P2,500,000 and liabilities of P1,500,000. Cost structure of the firm: • Fixed Costs: producing and marketing their pieces brass of sculptures is P500,000 • Variable costs per unit are the manufacturing costs (materials, labor and overhead) and marketing costs of P400. Production data: After careful study of the production processes, it was determined that manufacturing overhead was closely related to material usage. Thus manufacturing overhead to production is allocated based on pounds of materials used. The following are the production standards: Input 0.3 lb at P100/lb 1.2 hrs at P200/hr P60/lb x 0.3 lb (2) Raw Materials Inventory (3) Materials Quantity/ Usage Variance (4) Labor Rate Variance Cost/ Sculpture Direct Material (brass) Direct Labor Variable Manufacturing overhead Actual results for August 2022 are as follows: Production 35,000 sculptures Direct Material Purchased 12,000 lb at P110/lb Direct Materials Used 10,450 lbs Direct Labor 38,500 hrs for P8,085,000 P641,500 Variable Manufacturing overhead As a management accountant and business analyst for Drifblim, the undertakings are as follows: A. Variance Analysis. Ascertain whether each is favorable (F) or unfavorable (U) and recommendations for improvement. (1) Materials Price Variance 30.00 240.00 18.00
Drifblim Fine Furniture Inc Drifblim Fine Furniture Inc manufactures house decors. Brass sculptures are its best seller. The normal selling price of a piece of sculpture is P3,000. Drifblim has total assets amounting to P2,500,000 and liabilities of P1,500,000. Cost structure of the firm: • Fixed Costs: producing and marketing their pieces brass of sculptures is P500,000 • Variable costs per unit are the manufacturing costs (materials, labor and overhead) and marketing costs of P400. Production data: After careful study of the production processes, it was determined that manufacturing overhead was closely related to material usage. Thus manufacturing overhead to production is allocated based on pounds of materials used. The following are the production standards: Input 0.3 lb at P100/lb 1.2 hrs at P200/hr P60/lb x 0.3 lb (2) Raw Materials Inventory (3) Materials Quantity/ Usage Variance (4) Labor Rate Variance Cost/ Sculpture Direct Material (brass) Direct Labor Variable Manufacturing overhead Actual results for August 2022 are as follows: Production 35,000 sculptures Direct Material Purchased 12,000 lb at P110/lb Direct Materials Used 10,450 lbs Direct Labor 38,500 hrs for P8,085,000 P641,500 Variable Manufacturing overhead As a management accountant and business analyst for Drifblim, the undertakings are as follows: A. Variance Analysis. Ascertain whether each is favorable (F) or unfavorable (U) and recommendations for improvement. (1) Materials Price Variance 30.00 240.00 18.00
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Drifblim Fine Furniture Ind
Drifblim Fine Furniture Inc manufactures house decors. Brass sculptures are its best seller. The normal
selling price of a piece of sculpture is P3,000.
Drifblim has total assets amounting to P2,500,000 and liabilities of P1,500,000.
Cost structure of the firm:
•
Fixed Costs: producing and marketing their pieces brass of sculptures is P500,000
• Variable costs per unit are the manufacturing costs (materials, labor and overhead) and marketing
costs of P400.
Production data:
After careful study of the production processes, it was determined that manufacturing overhead was closely
related to material usage. Thus manufacturing overhead to production is allocated based on pounds of
materials used.
The following are the production standards:
Input
0.3 lb at P100/lb
1.2 hrs at P200/hr
P60/lb x 0.3 lb
(2) Raw Materials Inventory
(3) Materials Quantity/ Usage Variance
(4) Labor Rate Variance
Direct Material (brass)
Direct Labor
Variable Manufacturing overhead
Actual results for August 2022 are as follows:
Production
Direct Material Purchased
Direct Materials Used
Direct Labor
Variable Manufacturing overhead
As a management accountant and business analyst for Drifblim, the undertakings are as follows:
A. Variance Analysis. Ascertain whether each is favorable (F) or unfavorable (U) and recommendations
for improvement.
(1) Materials Price Variance
35,000 sculptures
12,000 lb at P110/lb
10,450 lbs
38,500 hrs for P8,085,000
P641,500
Cost/
Sculpture
P
30.00
240.00
18.00
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