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62 views

SCM

Uploaded by

medranoshena11
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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You are on page 1/ 5

Aqua Control Inc. manufactures water pumps and uses a standard cost system.

The
standard factory overhead costs per water pump are based on direct labor hours and are
as follows:

Variable overhead (4 hours at P8/hour) P32


Fixed overhead (4 hours at P5/hour*) 20
Total overhead cost per unit P52

* Based on a capacity of 100,000 direct labor hours per month

The following additional information is available for the month of November:


22,000 pumps were produced although 25,000 had been scheduled for production.
94,000 direct labor hours were worked at a total cost of P940,000.
The standard direct labor rate is P9 per hour.
The standard direct labor time per unit is 4 hours.
Variable overhead costs were P740,000.
Fixed overhead costs were P540,000.
FIXED OVERHEAD SPENDING
VARIANCE

Actual fixed overhead P540,000


Budgeted fixed overhead (100,000 DL hrs. x P5/hr.) 500,000
Unfavorable variance P 40,000
VARIABLE OVERHEAD SPENDING VARIANCE

VOH spending variance = (Actual VOH rate – Standard VOH rate) x Actual Hours

Actual VOH rate = Actual VOH Cost/Actual hrs.


P740,000/94,000 = P7.8723

Standard VOH rate = P8/ DL hr.

Actual Hours = 94,000

(P7.8723 - P8) × 94,000


= P12,000
Favorable
VARIABLE OVERHEAD EFFICIENCY
VARIANCE
VOH efficiency variance = (Actual hours – Standard hours) x Standard VOH Rate

Actual hours = 94,000 DL hrs.


Standard hours = 4 hrs. DL/unit x 22,000 units produced
= 88,000 DL hrs.
Standard VOH Rate = P8/hr

(94,000 - 88,000) × P8
= P48,000
Unfavorable
Variable Overhead Costs
Hours
Rate/ Hr. Amount
Actual 94,000 P
7.8723
- Standard 88,000 P8

- Variances in units – UF (F) 6,000 F (P 0.1277)


UF
x Base P8
VOH spending 94,000
variance = (Actual VOH rate – Standard VOH rate) x Actual
Variances in amount
Hours = (AR – SR) x– AH
UF =
(F)(P 7.8723 – P 8) x 94,000 = P 12,000
P (48,000)
F UF P 12,000 F
Variance description Efficiency
Spending
VOH efficiency variance = (Actual hours – Standard hours) x Standard VOH
Rate = (AH – SH) x SVOR = 94,000 – 88,000) x P 8 = P (48,000) UF

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