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 $2.25 $2.10
Raw materials units used 10,600 10,000
Direct labor payroll $120,960 $120,000
Direct labor hours worked 14,400 15,000
Manufacturing overhead incurred $189,500
Manufacturing overhead applied $193,500
Machine hours expected to be used at normal capacity 42,500
Budgeted fixed overhead for June $55,250
Variable overhead rate per machine hour $3.00
Fixed overhead rate per machine hour $1.30
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.

LQV $4,800 F

(b)
Compute the total overhead variance.

(c) Prepare an income statement for management. (Ignore income taxes.)