Problem 23-2A Ayala Corporation accumulates the following data relative to jobs

Question

Problem 23-2A Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2014 $4.00 11,100 $3.86 10,540 $174,640 $171,819 15,300 Raw materials unit cost Raw materials units used Direct labor payrol Direct labor hours worked Manufacturing overhead incurred Manufacturing overhead applied Machine hours expected to be used at normal capacity Budgeted fixed overhead for June Variable overhead rate per machine hour Fixed overhead rate per machine hour 14,800 $219,721 $222,921 43,000 $68,800 3.10 $1.60 ere sold for $475,000. Selling and administrative expenses were $3.8,000. Ass m? that the Overhead is applied on the basis of standard machine hours. 3.10 hours of machine time are required for each direct labor hour. The obs amount of raw materials purchased equaled the amount used Compute all of the variances for (1) direct materials and (2) direct labor. (Round answers to 0 decimal places, e.g. 125. (1) Total materials variance Materials price variance Materials quantity variance Total labor variance Labor price variance Labor quantity variance (2) Compute the total overhead varlance. Total overhead variance Prepare an income statement for management. (Ignore income taxes.) (Round ?nswers to 0 decimal places, eg, 125.) AY ALA CORPORATION Income Stitement For the Month Ended June 30, 2014

Explanation / Answer

1 Total materials variance: $3716 U (AQ x AP) - (SQ x SP) = (11100 x $4) - (10540 x $3.86) = $44400 - $40684 = $3716 U Materials price variance: $1554 U (AQ x AP) - (AQ x SP) = (11100 x $4) - (11100 x $3.86) = $44400 - $42846 = $1554 U Materials quantity variance: $2162 U (AQ x SP) - (SQ x SP) = (11100 x $3.86) - (10540 x $3.86) = $42846 - $40684 = $2162 U 2 Total labor variance: $2821 U (AH x AR) - (SH x SR) = (14800 x $11.80) - (15300 X $11.23) = $174640 - $171819 = $2821 U AR = $174640/14800 = $11.80 SR = $171819/15300 = $11.23 Labor price variance: $8436 U (AH x AR) - (AH x SR) = (14800 x $11.80) - (14800 x $11.23) = $174640 - $166204 = $8436 U Labor quantity variance: $5615 F (AH x SR) - (SH x SR) = (14800 x $11.23) - (15300 x $11.23) = $166204 - $171819 = $5615 F Total overhead variance: $3200 F Actual overhead incurred - Overhead applied = $219721 - $222921 = $3200 F Overhead applied = (15300 x 3.10) x ($3.10 + $1.60) = 47430 x $4.70 = $222921 AYALA CORPORATION Income Statement For the Month Ended June 30, 2014 Sales revenue 475000 Cost of goods sold (at standard)* 435424 Gross profit 39576 Variances: Materials price 1554 U Materials quantity 2162 U Labor price 8436 U Labor quantity 5615 F Overhead 3200 F Total variance 3337 U Gross profit (actual) 36239 Selling and administrative expenses 38000 Net income (loss) -1761 *Cost of goods sold (at standard) Direct materials (10540 x $3.86) 40684 Direct labor 171819 Overhead applied 222921 Cost of goods sold (at standard) 435424

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.