**Example Problem: Medical Emergency Kits Production Variance Analysis**---**Scenario:**Medicox, a producer of medical emergency kits, has purchased materials at a total cost of P10,200 and used 2,400 pounds of materials during May. The standard cost of materials per unit produced is based on 2 pounds per unit at a cost of P5 per pound. Production in May was 1,050 units.---**Tasks:**1. **Compute the total, price, and quantity variances for materials.**2. **Assume there is also an unfavorable labor quantity variance.**3. **Provide a possible scenario that explains the variances computed in (a) and the unfavorable labor quantity variance.**---**Step-by-Step Solution:**### (a) Calculate the Total, Price, and Quantity Variances for Materials1. **Total Variance** \[ \text{Total Variance} = (\text{Actual Cost} - \text{Standard Cost}) \] \[ \text{Standard Cost} = \text{Standard Quantity} \times \text{Standard Price} \] \[ \text{Standard Quantity} = 1,050 \text{ units} \times 2 \text{ pounds/unit} = 2,100 \text{ pounds} \] \[ \text{Standard Cost} = 2,100 \text{ pounds} \times P5/\text{pound} = P10,500 \] \[ \text{Actual Cost} = P10,200 \] \[ \text{Total Variance} = P10,200 - P10,500 = -P300 \quad \text{(Favorable)} \]2. **Price Variance** \[ \text{Price Variance} = (\text{Actual Price} - \text{Standard Price}) \times \text{Actual Quantity} \] \[ \text{Actual Price} = \frac{P10,200}{2,400 \text{ pounds}} = P4.25/\text{pound} \] \[ \text{Standard Price} = P5/\text{pound} \] \[ \text{Price Vari

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Description: **Example Problem: Medical Emergency Kits Production Variance Analysis**---**Scenario:**Medicox, a producer of medical emergency kits, has purchased materials at a total cost of P10,200 and used 2,400 pounds of materials during May. The standard cos

Purchase cost of materials=P10,200 Materials used in May month=2,400 pounds Production in month of…

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Medicox a producer of medical emergency kits has purchased (at a cost of P10,200) and used 2,400 pounds of materials during May. standard cost of materials per unit produced is based on 2 pounds per unit at a cost P5 per pound. Production in May was 1,050 units. (a)Compute the total, price, and quantity variances for materials (b)Assume it also had an unfavorable labor quantity variance. What is a possible scenario that would provide one cause for the variances computed in (a) and unfavorable labor quantity variance?

Medicox a producer of medical emergency kits has purchased (at a cost of P10,200) and used 2,400 pounds of materials during May. standard cost of materials per unit produced is based on 2 pounds per unit at a cost P5 per pound. Production in May was 1,050 units. (a)Compute the total, price, and quantity variances for materials (b)Assume it also had an unfavorable labor quantity variance. What is a possible scenario that would provide one cause for the variances computed in (a) and unfavorable labor quantity variance?

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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