Luna Company calculates its predetermined rates using practical volume, which is 288,000 units. The standard costsystem allows 2 direct labor hours per unit produced. Overhead is applied using directlabor hours. The total budgeted overhead is P3,168,000, of which P864,000 is fixed overhead. The actual results for the year are as follows: Units produced: Direct labor hours 280,000 570,000 Direct labor rate P9 P2,320,000 P872,000 Variable overhead Fixed overhead Required: Determine the following: 1. Fixed OH volume variance 2. Variable OH spending variance 3. Variable OH efficiency variance 4. Fixed OH spending variance

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Luna Company calculates its predetermined rates using practical volume, which is 288,000
units. The standard cost system allows 2 direct labor hours per unit produced. Overhead is applied
using directlabor hours. The total budgeted overhead is P3,168,000, of which P864,000 is fixed
overhead. The actualresults for the year are as follows:
Units produced:
Direct labor hours
280,000
570,000
P9
P2,320,000
P872,000
Direct labor rate
Variable overhead
Fixed overhead
Required: Determine the following:
1. Fixed OH volume variance
2. Variable OH spending variance
3. Variable OH efficiency variance
4. Fixed OH spending variance|
Transcribed Image Text:Luna Company calculates its predetermined rates using practical volume, which is 288,000 units. The standard cost system allows 2 direct labor hours per unit produced. Overhead is applied using directlabor hours. The total budgeted overhead is P3,168,000, of which P864,000 is fixed overhead. The actualresults for the year are as follows: Units produced: Direct labor hours 280,000 570,000 P9 P2,320,000 P872,000 Direct labor rate Variable overhead Fixed overhead Required: Determine the following: 1. Fixed OH volume variance 2. Variable OH spending variance 3. Variable OH efficiency variance 4. Fixed OH spending variance|
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