Ella Blanca Buya

1BSA

Async Activity

Requirement 1

Actual Quantity of Inputs (AQ)

Actual Price (AP)
Standard Price (SP)
Standard Quantity Allowed for Output (SQ)
Actual Hours of Input (AH)
Actual Rate (AR)
Standard Rate (SR)
Standard Hours Allowed for Output (SH)
a.
Materials Price Variance
= AQ (AP – SP) 25,000 pounds (P2.95 per pound – P2.50 per pound)
= P11,250 U
Materials Quantity Variance
= SP (AQ – SQ) P2.50 per pound (19,800 pounds – 20,000 pounds)
= P500 F

b. Finished goods and work in process inventories are significant and can be ignored.

c.
Labor Rate Variance
= AH (AR – SR) 3,600 hours (P8.70 per hour – P9.00 per hour)
= P1,080 F
Labor Efficiency Variance
= SR (AH – SH) P9.00 per hour (3,600 hours – 3,000 hours)
= P5,400 U

d. Variable Overhead Spending Variance

= AH (AR – SR) 1,800 hours (P2.40 per hour* – P2.00 per hour)
= P720 U
* P4,320 ÷ 1,800 hours = P2.40 per hour
Variable Overhead Efficiency Variance
= SR (AH – SH) P2.00 per hour (1,800 hours – 1,500 hours)
 = P600

Requirement 2 Requirement 3

Summary of variances:

Material price variance............................................................................................P11,250 Unfavorable

Material quantity variance.......................................................................................500 Favorable

Labor rate variance..................................................................................................1,080 Favorable

Labor efficiency variance........................................................................................5,400 Unfavorable

Variable overhead spending variance......................................................................720 Unfavorable

Variable overhead efficiency variance..................................................................... 600 Unfavorable

Net variance.....................................................................................................P16,390 Unfavorable

The net unfavorable variance of P16,390 for the month caused the plant’s variable cost of goods sold to
increase from the budgeted level of P80,000 to P96,390:

Budgeted cost of goods sold at P16 per metal mold...............................................P80,000

Add the net unfavorable variance (as above).......................................................... 16,390

Actual cost of goods sold.............................................................................. ....P96,390

This P16,390 net unfavorable variance also accounts for the difference between the budgeted net
operating income and the actual net loss for the month.

Budgeted net operating income............................................................................... P15,000

Deduct the net unfavorable variance added to cost of goods

sold for the month..................................................................................................... 16,390

Net operating loss......................................................................................... ..... (P1,390)