Name: ______________________________________________

Problem 1.
Franklin Glass Works’ production budget for the year ended November 30,1990 was based on 200,000 units. Each
unit requires 2 standard hours of labor for completion. Total O/H was budgeted at P900,000 for the year, and the
fixed O/H rate was estimated to be P 3.00 per unit. Both fixed and variable O/H are assigned to the product on the
basis of direct labor hours. Moreover, Franklin analyses O/H variances on a four-way basis. The actual data for the
year ended November 30, 1990 are presented below.

Actual production in units 198,000

Actual direct labor hours 440,000
Actual variable O/H P352,000
Actual fixed O/H P575,000

1. The standard hours allowed for actual production for the year ended November 30, 1990 total ______________
2. Franklin’s variable O/H efficiency variance for the year is _______________________
3. Franklin’s variable O/H spending variance for the year is _______________________
4. Franklin’s fixed O/H spending variance for the year is _______________________
5. The fixed O/H applied to Franklin’s production for the year is ___________________________

Problem 2

The Manila Company uses a standard cost system. The standard cost card for one of its products shows the
following materials standards:
Materials KilosX Std. Cost per Kilo = Amount
A 4 P7 P28
B 1 4 4
C 5 2 10
Total material cost per unit P42

The standard 50-kilo mix cost per kilo is P0.84(P42/50 kilos). The standard mix should produce 40 kilos of finished
product, and the standard cost of finished product per kilo is P1.05 (42/40 kilos). Materials of 250,000 kilos were
used as follows:

Material A 115,000 kilos at P8

Material B 25,000 kilos at P3.50
Material C 110,000 kilos at P2.50
The output of the finished product was 195,000 kilos.

Compute the following:

1. Material price variance ___________________

2. Material mix variance ___________________
3. Material yield variance ___________________
Problem 3.
On May 1, 2014, Liyah Company began the manufacture of a new mechanical device known as “
Dandy”. The company installed a standard cost system in accounting for manufacturing costs. The
standard cost for each unit of “Dandy” are as follows:

Raw materials, 6 kilos at P1.00 per kilo P 6.00

Direct labor, 1 hour at P4.00 per hour 4.00
Overhead, 75% of direct labor costs 3.00
Standard unit cost P13.00

The following data were obtained from Liyah’s records for the month of May 2014 producing 4,000
units:

Debit Credit
Sales P50,000
Purchases (26,000 kilos) P27,300
Material price variance 1,300
Material quantity variance 1,000
Labor rate variance 760
Labor efficiency variance 800
Total manufacturing overhead variance 500

The amount shown above for material price variance is applicable to raw material purchased during May.

Required: Compute each of the following items for Liyah for the month of May 2014:

1. Actual quantity of raw materials used (in kilos) _____________________

2. Actual hours worked _____________________
3. Actual direct labor rate _____________________