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C7 PreTest

The document outlines a gross profit variance analysis request from a company president, detailing sales and cost figures for 2023 and 2024. It also includes a budgeted cost function for Bubbly Bottling Inc. with actual results, requiring various variances calculations for manufacturing overhead. Additionally, it provides standard cost system information for Gem Company and Egay Corporation, asking for material and labor variances calculations.

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Alyza Almonia
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113 views1 page

C7 PreTest

The document outlines a gross profit variance analysis request from a company president, detailing sales and cost figures for 2023 and 2024. It also includes a budgeted cost function for Bubbly Bottling Inc. with actual results, requiring various variances calculations for manufacturing overhead. Additionally, it provides standard cost system information for Gem Company and Egay Corporation, asking for material and labor variances calculations.

Uploaded by

Alyza Almonia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

The president of a company, which makes a single product, requests an explanation for the
gross profit decrease for 2024. The following information is available:
2023 2024
Sales ₱20,000 ₱22,500
Cost of goods sold 15,000 19,500
Gross profit ₱ 5,000 ₱ 3,000
Units sold 2,500 3,000

REQUIRED: Gross profit variance analysis.

2. Bubbly Bottling Inc. (BBI) presented you the following budgeted monthly cost function for its
total manufacturing overhead: (₱2,500 x Machine Hours) + ₱1,000,000. The budgeted
production volume for the month is 300,000 bottles requiring 600 machine hours. It is BBI’s
policy to use machine hours for measuring the volume variance of fixed manufacturing
overhead.

The actual results for the month are as follows:

Actual Production: 310,000 bottles


Actual Machine Hours: 630 machine hours
Actual Variable MOH: ₱1,638,000
Actual Fixed MOH: ₱950,000

Calculate the following:


1. Variable MOH Rate Variance (4-way variance)
2. Variable MOH Efficiency Variance (4-way variance)
3. Fixed MOH Spending Variance (4-way variance)
4. Fixed MOH Volume Variance (4-way variance)
5. Spending Variance (3-way variance)
6. Efficiency Variance (3-way variance)
7. Volume Variance (3-way variance)
8. Controllable Variance (2-way variance)
9. Uncontrollable Variance (2-way variance)

3. Gem Company uses a standard cost system. Information for raw materials for Product G for the
month of November is as follows:
Standard unit price P1.60
Actual purchase price per unit P1.55
Actual quantity purchased 2,000 units
Standard quantity allowed for actual production 1,800 units

Calculate the following:


What is the materials purchase & quantity variance?

4. Egay Corporation uses a standard cost system. Direct labor information for Product E for the
month of October is as follows:
Standard unit price P6.10 per hour
Actual rate paid P6.00 per hour
Standard quantity allowed for actual production 1,500 hours
Labor efficiency variance P600 unfavorable

What is the actual hours worked?

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