FAREASTERN UNTVERSITY EU-AB

Institute
of Accounts Business and Finance
NO.
MANAGEMENT ACCOUNTINGI and II
QUIZ 3-
STANDARD COSTING AND VARIANCE ANALYSIS
BRYAN TRINIDAD

MULTIPLE CHOICE Select the best choice. Use your bubble sheet for your answers. Please make sure to fill-up all
the necessary information on the bubDIe sneet particularly your student number.

1. A company would most Ikely nove d v o r o o o r rae variance and unfavorable labor efficiençy if
a. the mix of workers used in neProuuOn procesS was more experienced than the normal mix
. the mix of workers used in tne pro0uction process was less experienced than the normal mix
C. workers from another partotne pant were USed due to an extra heavy production schedule
d. the purchasing agent acquired a very high quality of material that resulted in less spoilage

2. dseetnt
In the analysis of standard cost variances, the item which recelives the most diverse treatment in accountingis
D i r e c t labor cost C. Direct material cost
overhead cost d. Variable cost.
D. Factory

.3. Which one of the following would o t explain an adverse direct labor efficiency variance?
a. Poor scheduling of direct labor hours
b. Setting standard efficiency at a level that is too low
C. Unusually lengthy machine breakdowns
A reduction in direct labor training
e. None of the above

4. When expenses estimated for the capacity attained differ from the actual expenses incurred, the resuiting
balance is termed the
C. Unfavorable variance.
a. Activity variance.
d. Volume variance.
PBudget variance.

5. At the end of a period, significant material

a price variance should be

a. closed to cost of Goods Sold. Cost of Goods Sold.

allocated among Material, Work in Process, Finished Goods, and
Raw
and Cost of Goods Sold.
C. allocated among Work in Process, Finished Goods,
d. carried forward as a balance sheet account to the next period.

variance (calculated at point of purchase) and material quantity variance equals

6. TheSumpf price
the material
A the total cost variance.
b. the material mix variance.
variance.
C. the material yield
meaningful number.
d. no

indicate:
7. A
tavorable eficiency variance
for direct materials might
lower-quality materials
were purchased pmu
that
an overskilled workrorce processes
products or Pm
C.poor design of supplier
d. a lower-priced was used p
indicate that:
A price variance for direct manufacturing labor might
8. taorahle more than planned x
were paid
a.b. employees
budgeted price standards are too tignt
hired
underskilled employees are being
d. an efficient labor force x

9. A
purchasing manager's performance is best evaluated using the:
2direct materialS price variance
b. direct materials Tlexible-budget variance
C. direct manutacturing labor flexible-budget variance
effect the manager's action has on total costs for the entire company
d
10. When machine-hours are used as a cost-allocation base, the item most likely to contribute to a ftavorable variable
Overnea_eigenCY Variance Is:
a. excesSive machine breakdowns X
,A
. the production scheduler's impressive
C.a decline in the cost of energyX
scheduling of machines (
strengthened demand for the product
 Standard Costing and Variance Analyss
overtime
in ynpiannsd
08se, rusn oroer resulting
are used as an overnedo coaocon c o n t r i b u t e t o reporting a(n)
When machine-hours machines would mostikely
the
n
worNeS
ndt used SSRIEe overneo
a0)
spenng voriance
TdvordDie variadle erhead efficiencyvanence
variance
untavoroe erhead flexible-budget
c. favorabie roduction-volume variance
production-volume
variance

overhead allocated
fixed manufacturing
unravorable

D. and the
cturng overhead
difference between
budgeted n the ixedoverhead:
12. The units
acnieved
s aeO

output
o actual
toactuncy varnaariance
flexible-budget varan
C. combined-varidnce r
production-volume varidnce tor equipment
base and annual leasing costs
oernedd cost-allocation
machine-hours re useo d wouid De to report Btn):
13. When
se, the most ikely resuit
unexpectee
a. unfavord
variable overhead spending varience
ahle overhead efticiency vo nce

b. t a v o r h l e fxed overhead flexible-budger varian

production-voldme
vàriànce
b. favorable

the difference between:

variance measures o v e r h e a d costs

14. The variable overnedd nexioieouoget

dng the static budget for variable costs
costs
actual variabie overned the for variable overhead
iexible budgetfiexible variable overhead
costs
overnedd coStS dnd budget for
actual variaDle ror Overhead
cOsts and the
varidoie

the static budget is correct.

these answers
d. None of contribute to a avorapl
base, the item most likely to
as a cost-ailocation
machine-hours are used EASH APr
15. When
proouction-voiume variance Is:
of the product
the selling price than expected
a. an increase in manufacturing
machine costing considerably less
purchase of a
new
the decline in the cost of energy
C. a
demand for the product
strengthened
.
the selection of standards is truve? something to live up
to.
following statements about
employees
the levels since they give
16. Which of extract higher performance
à. 1deal standards tend to
standaras may
encourage operating inetficiencies
from achieving their fuil
performance potential.
in
Currentiy attainable
D.
discourage empioyees r u s t r a t e d , thus causing
a deciine

CCurrently attainable standards erficiencY which may leave workers

d e m a n d maximum
standards
Ideal
performance. statements is true
e. None of the above
cost systems is true?
17. Which of the following
statements regarding standard
are not necessarily good variances.
Favorable variances variances from
standard.

b.
investigate
Managers will all for material price
variances.

supervisor Is generally responsible change in the future.

C. The production
purposes since
costs normaily
cannot be used for planning
d. Standard costs statements is true
e. None of the above

plant producing many diferent products,in

company has a highly automated manutacturing overnead cOsts to work
18. When a manufacturing Is the more appropriate basis or appiying
manuracturing
which
of the following
process
a. direct labor hours
b . direct labor cOst
Smachine hours
cost of materidis useu

19. Variance analysis includes all of the following except

a. taking correctixe action.
investigating all variances
developing performance measures to track activities causing the variance.
Identification of the cause.

20. One of the purposes of standard costs is to

A, minimize the use of budgets.
6. control costs, motivate, and measure efficiencies.
avoid rellance upon actual costs.
D. eliminate accounting for over- or under-applied overhead at the end of the
period.
21. Vhich department is customarily held responsible for an unfavorable materials usage variance?
A. Quality Control.
C. Engineering.
 Analys3
Standard Costing and Variance

.Production. undertaken only if

Shouid be
Purchasing.
an
investigation or avarance
than zero.
s ag e n e r a l rule, costs.

a. the anticipated De are greater than the expected

t h e anticipated Denents"
C . v a r i a n c e is negative
determine its
is pOSIEYE responsibility will
point of
varidnce
the
C. closest to the
vorionces
ar the point

ompany
wishing
to Isolate
23. ACo
rice variance when
nater A IS purch
material is issued to oroduction.
pi on
Useo in Drou
materia s
Compreted.

OUction

. proou difference between

created Dy à
ariance is
24. The sales p andard contribution margin.
actua xpected sales price.
actual
C.expected and standara netvincome
olume.
sales
expected
d. actual
dctuae
and
manufacture of Product
B.

làbor intormation pertains to the O i r e c t abor hours

direct manurocturning
The following
25. unic oe
70
Timerequired to dke
Number Or Ore per week, per worker 500
Number
productve
of nours 20% of wages

weekly wage reated as direct manufacturing laborcOstsor Product B

40
Workers dard direct manufacturing labor
standard direct
labor
dnurecturing
cost
per unit 15
What is the
P24
d. P12
. PI5
following
standards for the year. 25
Lucky Company
sets the P9.00
26.
cost (2 DLHP4.50 155.00
Direct idi r overhead [2 DLH @ P7.50] budget for
Manufacturing
The following Is
the annual
equaly each month.
its oniy product
plans to produce
Lucky Company
Overhead costs:
P150,000
overerhead 300,0
Uariable overhea direct labor nours
60,00
overhead
in Actual
Normal activity used of 5,050.
with actual direct labor hours
produced 2,450 units Dudgeted.)
(FIxed overhead's as
Company
In March, Lucky amounted to P3/,245
f o r the month
costs
for Lucky Company is
of
overhead volume variance
The amount P750 U
P250 U C.75
d. P375
U
b. P500 U
resulted in a P3,000
of 19,500 units
costs of P75,000. Actual production overhead rate?
budgeted fixed to determine the fixed
27. QKL Co. has total normal capacity was used
variance. What
unfavorable volume

18,750 C. ,590
. 16,500
20,313
Company: AFOW AA
from the yro
28.
The folowing information is available
Actual tactory / n P15,000
P7,4200
Fixed O/H expenses, d
Fixed o/H expenses, DUOgete P7,000 5
3,500
Actual hours
tencaro hours 3,800 15+
rate per DLH P2
dnddro vandoie OR of O/H variances, what is the spending variance
ASSuming that yro
Uses a
three-way analysis
P950 F c.
D. P750 U . P200 U
with machine-hours.
29. At Overland Company, cost is exclusively a variable cost that varies directly
maintenance
that actual maintenance costs totaled P9,800 and that the assoCiated
The performance report for July showed
spending variance was P200 untavorable. if 8,000 machine-hours were actually worked during Juy, the budgeted

maintenance cost per machine-nour was

P1.20. C. P1.275.

D. 1 25. . P1.225. 2
25

MGT ACT1&2 Q-03 3

of 7
 Standard Costing and Variance Analysis
and

P9,000 favorable volume variance, a

P7.500 unfavorable variabie overhead spending variance,
aly had a
varience was

Urodi overapplied overhead. The xed overhead Dudget

C. P4,500 unfavorable.
De O0n favorahle
b. P8,000 tavoro
d . P8,000 untavorable
4
follows:
labor costs ror n e month or January were as
31 LionCompany's direct
Actual direct labor nours 21,000
hours
direct labor
Standard rate
variance
~ unavorabie
P3,000
e c t 8Dor P126,00
Total variance?
What was Lion s direct
labor erficiencCy
C. Po,S00
. P6,000 d. P6,450 F
( 5

P6,1. CO for the month of October is as

a standard cost system, Overhead cost information for Product

32. Air, Inc. uses
follows: AFoH APP
Total actual overhead incurred P12,600
FIxed overhedd budgeted
Total standard overnead rate per DLH
Variable overnedd rdte per Ln
P3 2. 4
,500
Standard
the
hours a ncer
what
.
is
oveta p1 400 F
d. P1,400 U
. P1,200
overhead costs and proouction datd àre
à standard cost accounting system. The following
33. Union company uses
àvallabiee ror August: APP
Standard fixed overhead rate per DLH AroH
Standard variable overhead rate per DL p4
Budgeted monthly DLH 40,000
Actual DLH worked 9,500 15
Standard DLH allowed for actual production 39,000
favorable P2,000
Overaii overnead variance-
The actua factory overhead tor August should
. P199,500
be

a. P195,O00
D. P197,000 P193,000

C. P197,500
500
the
Given forbudget
34. flexible variable
based onfactory
standara inputofallowed
overhead GHI Products, Inc.output,
for actual P39,500 actual input at budgeted rate, p41,
P2,500 tavorable riexible budget variance.BAS

Compute the spending variance.

a. Ps00 unfavorable. SO0 favorable.
d. P2,000 unfavorable
b. P2,000 favorable. 2
35. The records of Phoenix Corporation revealed the following data for the current year.

Work In Process 24
Finished Go0ds 115,000
3,650 Cos
Cost of Goods Sold 2.54
Direct Labor 111,600
84,4200
Direct Material
Assume that Phoenix has underapplied overhead of P37,200. What journal entry is needed to close the overhead
account? (Round decimals to nearest whole percent.)
Debit Wark in Process P8,456; Finished Goods P13,294; Cost of Goods Sold P15,450 and credit Overhead
P37,200
b. Debit Overthead P37,200 and credit Work in Process P8,456; Finished Goods P13,294; Cost of Goods Sold
P15,450
C. Debit Work in Process P37,200 and credit Overhead P37,200
DebIt COst of Goods Sold P37,200 and credit Overhead P37,200

36. The tollowing is a standard cost variance analysis report on direct labor cost for a division of a
manutacturing
company ACEua Hours at Actual Hours at qB5 43 AG.
Standard Hours at
ACtual Wges Standard 00
Wages Standara ag
P,23 P3,100
15,675 ,000
19,/88 ,000 6,600
18,755 ,250
Ordisals PB,500 2,650
8,500
What is tne total tlexible
A. P1,00 untavorable.
budget direct tabor variance tor the
P45,00
C. division
PI,9900 tavorabie.
 Standard Costing and Variance Analy

D. P2,000 unfavorable.
P1,900 unfavorable.
quantity unit
of material allowedTorperAprl, was 2
pounds at a
During April, 80,000 units produced. The
were standard how many inished
Ound. If there was a favorable usage variance
g Paogoo
standar cost d
produ
A. T6R DO 84,000
. 76,000
152,000 month, 9,000 units were produced
hours at P8 per hour. Last
38. The standards for direct labor
for a
product are 2.5
The actual number of hours worked during the
past perioG was:

was
and thelabor efficiency
variance P8, C.
20,500.
23,500.
. 22,500.
D. 21,500.
industries.
various types of plastic and rubber coated tubing products for various
39. Beacon Company manufactures
tandard cost accounting system is used. h e rolowing are àvanablie
14,0
Actual total overhea0 1
2.50 25. 13.223
Budgeted xed cost rate per standard direct labor hour p . 42.5
Tota overhead application 16,000 2.79 44 .2
Actual hours usedd
17,000
Standard hours allowed 4,,000
Normac set variance s .
500 favorable. C. P4,200 favorabie.
B. P1,500 unfavorable D: P4,200 unfavorable.
of
a cOst system in which it applies manutacturin9 overhead
on the basis dire
0. Der
Company Uses standard
d0orcnours.Wo irect iaoor-nours àre quired for each unit produced.
tor activlty was set at
riod: 20 percent of this cost was Hxed
tne
9,000 units. Manutacturing overhead was Dudgeted at P135,000Tor pen8.500 units. Variable
The 17,200 hours worked during the period resulted in productio
P28,000. The
manutacturtng
P108,500 and fixed manufacturing overhead cost was denominator
overhead cost incurred was
level variance for the period was:

A. P5,300 unfavorabie .P1,500 unfavorable. 102

B. P1,200 unfavorable. P6.500 unfavorable.
12 2.3
the following data for the year:
41. TYD, Inc. reported
Actual hours
0,000
Denominator hours 150,000
Standard hours allowed for output 140,000
Fixed predetermined overnteua
P6 per hour
p4 per hour
Variable prederermnu a d rate ASH
APP
TOH
AAH
YD'S non-controlldue a
neither favorable nor under-applied.
A. P60,000 which is 46D
B. P60,000 favorable.
C. No volume variance. 50
PP60,000 under-applied.
includes
monthly production of 5,000 units. The master budget
42. Setter Corporation's master budget calls for the variable cost. During thee
an annual indirect labor cost
of Pl44,000. Setter considers indirect labor to be a

labor of P10,100 were incurred. A

month of April, 4,500 units flexible
and
of product were produced, a indirect costs labor of
for indirect
performance report utilizing budgeting would report budget variance AFOH DAAH
B. P700 favorable
a. P1,900 untavorable e. P700 unfavorable 2.
b. P1,900 favorable
C. P119,500 favorable

43. Based on the following partial comparative income for the year 2020 and 2019, compute the amount of change in
contribution margin due to a change in variable cost per unit.
2020 2019
Sales P1,397,250 P1,350,000
Variable expense 1.267.875 . S 1.050.000
Contribution margin
Effective January 1, 2020, the
P129.375 P0 2300.000
selling price per unit was decreased bY 10 percent.
a. P50,375 increase P72,4 rease
D. P60,375 decrease d. P72,450 decrease

44. Compute the sales volume variance based on the following data
21
Unit sales Budget ACTUal
Unit sale5 price 20,000 21,000
PS2
Unit variable cost
a. P30,000 Favorable P21

.P12,000 Favorabie 12
C.P30,000 Untavorable 2

MGT ACT1&2 5 01
 Analysis
Standard Costing and Variance

d. P12,000 Unfavorable

thret question next

product. The 35,000 units
materia of raw
intormation ror the
se the following in
manutacture
of its Singie one unit of tina
Uses a
standard
costing system the units of raw material are requireopo was
nemking
in inventory were purchased ror Pl0S,000 dnd standard allowed for materia
product. The
product. In November, tne c O p e n y
ed 12,000 units of
variance of P2,500.
quantity
P60,000, and there was an
unfavorable
5
of material is:
standard price for one unit (2.5
45. ChemKing's
. P2.00 Ps.00
P2.50

46. The materials price

variance for the units used in November was:
152.5
a. P2,500 U
12. 7.5u
.
b. PI1,000 U

to produce
November output totaled
47. The units
of material
used
24,000
b. 12,50o
D.
25,000
ddt
for the next three questions and cost
information
the following activity
Use the following à Singie product. The company
recorded

ASH APP
makes and selis
Company
ne
urry
Afo AAH
May- 45,000 units GG G. G4.,
Number or units Completed
per unit
of
product 1.5 DLHS
Standard direct laDor-nours allowed
nominator activity)
72,000 DLHS 4.25 u
Budgeted de ead costs incurred P66,000
Actual tixed ove PA,2750-
volume vardie predetermined overhead rate is PO.95 per direct labor-hour
of the
The fixed portion
was:
overhead flexible budget for May
in the company's
48.
The amount
of fixed overhead contained
125. P68,400.

b. P67,50o. d. P70,275.
was
cost applied to work
in process during May
49. The amount of fixed manufacturing overhead
725. C. P42,750.
P64,1
b. P62,700.
for May was:
The fixed overhead budget variance
50.
C. Pb,O00 .
a, P2,400 U.
. Pb,000 F.

P2,400F
the next four questions. cost for one pack of the
information for
overhead
h e standard
Candy.
Use the folowing
Company produces Its only product, Ko0
Mint

The Tbarra
roouct follows: P27
FIxed OH [1.50 hours at P18]
P 10]
O |1.50 hours at
vanaoie used 31,050 direct labor
hours for the
year, lbarra
Tota

1barra Company uses expected volume of 21,000

units.
During thefixed and P308,700
variable.
costs were P545,000
Actual overhead
of 20,000 units.
production
AfOH DAAH ASH AP 1 .
51. The amount of variable overhead spending
variance is
545 564 S6 SAO 31.5
C. P1,800 Unfavorable
d. P b,300 ravordoe H P1,800 Favorable
b. P 8,700 Favorabie

52. The total overhead controllable variance is

a. P23,800 ravordOe C. P23,800 Unfavorable J
P 1 3 , 3 0 0 Fàvorabie
d. P13,300 Unfavorable 24
53. The overhead efficiency variance Is
a. P l 0 , 0 0 Favordole P10,500 Unfavorable
D. P15,000 Favorable d. P15,000 Unfavorable

54. The amount of volume variance is

Zero 0 0 0 Unfavorable
. P27,000 Favorable d. P18,000 Unfavorabie

Use the following information next six for the questions.

Uitra-Shine Company manufactures a cleaning solvent. The company employs both skilled and unskilied workers. To
produce one 55-gallon drum of solvent requires Materials A and B as well as Skilled labor and unskilled labor. The
standard and actual material and labor information is presented below;

MGT ACT1&2 Q-03 6 of 7

 Standard Costing and Variance Analysis

tandard:
Material A: 30.25 gallonsP1.25 per gallon
Material B: 24.75 gallons P2.00 per gallon

Skilled Labor: 4 hoursP12 per hour

Unskilled Labor: 2 hours P 7 per hour

Actua gallons purchased and used P1.50 per gallon

Material
A: 10,716 and used P 1 . 9 0 per galon
Material B: 17,484 gallons purchased

Skilled labor hours: 1,950P11.90 per hour

hour
Unskilled labor hours: 1,300 P7.15 per
During the current
month U l t r a - s h i n e company
manufactured
500 55*gallon drums
all answers to
the nearest
whole
peso.
Round
otdi
matendi
price variance? .5
P931|
D. P877
. P931 F (1.35 2
mix variance?
56. What is the total material
a. 596 F
C. P4,864 F 19.3 2.48
P3,596U
d. p4,864U
2.0A 1.34844 5
57, What is the total material yield variance?
(5.0425
C.P2,670 U 10,41 5.51

b. P1,111 P2,670 F 1 . 4
A.55S5
58. What is the labor rate vanancer
7.2 9.2
8U
G, P1,083F
b. P1,083 U
3a.413
59. What is the labor mix variance
08 F
a. P,083 O. P 2 , 5 8 8 F
V
b. P2,588U
60. What is the labor yleld varance
C. P1,138 F
P2,583U
12
d. P1,138U
b. P2,583F 17, 5
-end
3
(.193) 1450

S1.45 2.1G (2.)

1.51

3.25 3.25

(500 2
41.44
G2
56.