Costs and Production Data Actual Standard Warning Don\'t show me this message ag
ID: 2427283 • Letter: C
Question
Costs and Production Data
Actual
Standard
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(a)
Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2014.Costs and Production Data
Actual
Standard
Raw materials unit cost $4.10 $3.98 Raw materials units used 11,300 10,560 Direct labor payroll $176,120 $172,431 Direct labor hours worked 14,800 15,300 Manufacturing overhead incurred $219,381 Manufacturing overhead applied $222,921 Machine hours expected to be used at normal capacity 43,000 Budgeted fixed overhead for June $68,800 Variable overhead rate per machine hour $3.10 Fixed overhead rate per machine hour $1.60Overhead is applied on the basis of standard machine hours. 3.10 hours of machine time are required for each direct labor hour. The jobs were sold for $487,000. Selling and administrative expenses were $42,300. Assume that the amount of raw materials purchased equaled the amount used.
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Explanation / Answer
AYALA CORPORATION Income Statement For the Month Ended June 30, 2014 Sales revenue $400,000 Cost of goods sold (at standard) 330,000 Gross profit (at standard) 70,000 Variances Material price $ 1,590 UNF Materials quantity 1,260 UNF Labor price 5,760 UNF Labor quantity 4,800 FAV Overhead 605 UNF Total variance - favorable 4,415 Gross profit (actual) 65,585 Selling and administrative expenses 40,000 Net income $25,585 Total Labor Variance: ( AH X AR ) minus ( SH X SR ) ( 14,400 X $8.40 ) minus ( 15,000 X $8.00 ) = $120,960 minus $120,000 = 960 UNF Labor Price variance: ( AH X AR ) minus ( AH X SR ) ( 14,400 X $8.40 ) minus ( 14,400 X $8.00 ) = $120,960 minus $115,200 = 5760 UNF