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P11-2A Ayala Corporation accumulates

Price: $2.50


Ayala Corporation accumulates the following data relative to jobs started and
finished during the month of June 2014.



Overhead is applied on the basis of standard machine hours. Three hours of machine
time are required for each direct labor hour. The jobs were sold for $400,000. Selling and
administrative expenses were $40,000. Assume that the amount of raw materials purchased
equaled the amount used.

Instructions
(a) Compute all of the variances for (1) direct materials and (2) direct labor.
(b) Compute the total overhead variance.
(c) Prepare an income statement for management. (Ignore income taxes.)

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