Standard Costing Multiple Choice

1 – 6 Vince, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the
basis of direct labor hours. The company uses a standard cost system and has established the following
standards for one unit of product:
Standar
Standard Standard Price d
Quantity or Rate Cost
Direct materials 1.5 pounds P 3.00 per pound P 4.50
Direct labor 0.6 hours P 6.00 per hour P 3.60
Variable manufacturing overhead 0.6 hours P 1.25 per hour P 0.75
During March, the following activity was recorded by the company:
 The company produced 3,000 units during the month.
 A total of 8,000 pounds of material were purchased at a cost of P23,000.
 There was no beginning inventory of materials on hand to start the month; at the end of the month,
2,000 pounds of material remained in the warehouse.
 During March, 1600 direct labor hours were worked at a rate of P6.50 per hour.
 Variable manufacturing overhead costs during March totaled P1,800.
1. .The materials price variance for March is:
A) P1,000 F B) P1,000 U C) P750 F D) P750 U

2. The materials quantity variance for March is:

A) P4,500 F B) P10,500 F C) P10,500 U D) P4,500 U

3. The labor rate variance for March is:

A) P480 U B) P800 U C) P480 F D) P800 F

4. The labor efficiency variance for March is:

A) P5,040 U B) P1,200 U C) P1,200 F D) P5,040 F

5. The variable overhead spending variance for March is:

A) P200 U B) P600 U C) P600 F D) P200 F

6. The variable overhead efficiency variance for March is:

A) P1,050 F B) P1,050 U C)P250 F D) P250 U

7. The Fency Company uses standard costing. The following data are available for October:

The standard quantity of material allowed for October production is:

A. 23,000 pounds B. 24,000 pounds C. 24,500 pounds D. 25,000 pounds

8. The following direct manufacturing labor information pertains to the manufacture of product GLU:
Time required to make one unit 2 direct labor hours
Number of direct workers 50
Number of productive workers per week per worker 40
Weekly wages per worker P 400
Workers’ benefits treated as direct manufacturing labor costs 20% of wages
What is the standard direct manufacturing labor cost per unit of Product GLU?
a. P 30 b. P 24 c. P 15 d. P 12

9. Information on Hanley’s direct labor costs for the month of January is as follows:
Actual direct labor rate P 7.50 Actual direct labor hours 10,000
Standard direct labor hours allowed 11,000 Direct Labor rate variance - favorable P 5,500
The standard direct labor rate in January was
A. P 6.95 B. P 7.00 C. P 8.00 D. P 8.05

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 10. Information on Westcott Company’s direct labor costs is as follows :
Standard direct labor rate P 5.00 Standard direct labor hours 10,000
Actual direct labor rate 5.10 Unfavorable efficiency variance P 4,200
What was the actual number of hours worked by Westcott Company’s workers ?
a. 8,176 b. 8,200 c. 10,840 d. 8,400

11 – 20 Spots Inc. uses a standard cost system for its production process. Spots applies overhead based on
direct labor hours. The following information is available for July:
Standard: Actual:
Direct labor hours per unit 2.20 Units produced 4,400
Variable overhead per hour P 2.50 Direct labor hours 8,800
Fixed overhead per hour (based on 11,990 DLHs) P 3.00 Variable overhead P29,950
Fixed overhead P42,300
11. Using the four-variance approach, what is the variable overhead spending variance?
a. P 7,950 U b. P 25 F c. P 7,975 U d. P 10,590 U

12. Using the four-variance approach, what is the variable overhead efficiency variance?
a. P 9,570 F b. P 9,570 U c. P 2,200 F d. P 2,200 U

13. Using the four-variance approach, what is the fixed overhead spending variance?
a. P 15,900 U b. P 6,330 U c. P 6,930 U d. P 935 F

14. Using the four-variance approach, what is the volume variance?

a. P 6,930 U b. P 13,260 U c. P 0 d. P 2,640 F

15. Using the three-variance approach, what is the spending variance?

a. P 23,850 U b. P 23,850 F c. P 14,280 F d. P 14,280 U

16. Using the three-variance approach, what is the efficiency variance?

a. P 11,770 F b. P 2,200 F c. P 7,975 U d. P 5,775 U

17. Using the three-variance approach, what is the volume variance?

a. P 13,260 U b. P 2,640 F c. P 6,930 U d. P 0

18. Using the two-variance approach, what is the controllable variance?

a. P 21,650 U b. P 16,480 U c. P 5,775 U d. P 12,080 U

19. Using the two-variance approach, what is the noncontrollable variance?

a. P 26,040 F b. P 0 c. P 6,930 U d. P 13,260 U

20 . Using the one-variance approach, what is the total variance?

a. P 19,010 U b. P 6,305 U c. P 12,705 U d. P 4,730 U

21. The following information is available from the Tyro Co. :

Actual factory overhead P 15,000 Actual hours 3,500
Fixed overhead expenses, actual 7,200 Standard hours 3,800
Fixed overhead expenses, budgeted 7,000 Variable overhead rate per DLH P 2.50
Assuming that Tyro uses a three way analysis of overhead variances , what is the spending variance ?
a. P 750 F b. P 750 U c. P 950 F d. P 1,500

22. Menchie Corporation is developing standards for its products. One product requires an input that is
purchased for P57.00 per kilogram from the supplier. By paying cash, the company gets a discount of 8% off this
purchase price. Shipping costs from the supplier's warehouse amount to P3.60 per kilogram. Receiving costs
are P0.26 per kilogram. The standard price per kilogram of this input should be:
A. P 57.70 B. P 56.30 C. P 65.42 D. P 57.00

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 Price per Kilo P57.00
discount of 8% (4.56)
P52.44
Shipping costs P3.60
Receiving costs P0.26
Standard price per kilogram P56.30

23. Jamie Corporation is developing standards for its products. Each unit of output of the product requires 0.53
kilogram of a particular input. The allowance for waste and spoilage is 0.06 kilogram of this input for each unit of
output. The allowance for rejects is 0.12 kilogram of this input for each unit of output. The standard quantity in
kilograms of this input per unit of output should be: A) 0.53 B) 0.35 C) 0.71 D) 0.47

Material requirement per unit (kg) 0.53

Allowance for spoilage 0.06
Allowance for rejects 0.12
Standard quantity in kilograms / unit 0.71

24. Dan Corporation is developing direct labor standards. The basic direct labor wage rate is P10.95 per hour.
Employment taxes are 9% of the basic wage rate. Fringe benefits are P4.00 per direct labor-hour. The standard
rate per direct labor-hour should be: A) P5.96 B) P4.99 C) P10.95 D) P15.94

Direct labor wage rate P10.95

Employment taxes are 9% 0.99
Fringe benefits P4.00
Standard rate per DLH P15.94

25. Zeny Corporation is developing direct labor standards. A particular product requires 0.94 direct labor-hours
per unit. The allowance for breaks and personal needs is 0.02 direct labor-hours per unit. The allowance for
cleanup, machine downtime, and rejects is 0.10 direct labor-hours per unit. The standard direct labor-hours per
unit should be: A) 0.82 B) 0.92 C) 0.94 D) 1.06

26 – 31 A manufacturing company has a standard costing system based on direct labor hours (DLHs) as the
measure of activity . data from the company’s flexible budget for manufacturing overhead are given below :
Denominator level of activity 3,700 DLHs
Overhead costs at the denominator activity level:
Variable overhead cost P28,490
Fixed overhead cost P47,545
The following data pertain to operations for the most recent period:
Actual hours 3,900 DLHs
Standard hours allowed for the actual output 3,850 DLHs
Actual total variable overhead cost P29,445
Actual total fixed overhead cost P47,995

26. What is the predetermined overhead rate to the nearest cent?

a. P20.93 b. P19.86 c. P19.50 d. P20.55

Overhead costs at the denominator activity level:

Variable overhead cost P28,490
Fixed overhead cost P47,545
P76,035
Divided by: 3,700 DLHs
P 20.55
27. How much overhead was applied to products during the period to the nearest peso?
a. P79,118 b. P76,035 c. P77,440 d. P80,145

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 Standard hours allowed for the actual output 3,850 DLHs
Multiply by: P 20.55
P79,118

28. What was the variable overhead spending variance for the period to the nearest peso?
a. P585U b. P585F c. P955U d. P955F

Variable Overhead Spending Variance = (AH x AVOR) - (Budgeted VOH)

=
= P29,445 – P30,030
= P585 U

29. What was the variable overhead efficiency variance for the period to the nearest peso?
a. P578U b. P385U c. P378U d, P955U

30. What was the fixed overhead budget variance for the period to the nearest peso?
a. P615F b. P2,120U c. P1,478U d. P450U

31. What was the fixed overhead volume variance for the period to the nearest peso?
a. P1,870F b. P1,928F c. P643U d. P2,570F

32 - 37 Franklin Glass Works’ production budget for the year ended November 30, 2019was based on 200,000
units . Each unit requires 2 standard hours of labor for completion. Total overhead was budgeted at P 900,000
for the year , and the fixed overhead rate was estimated to be P 3.00 per unit. Both the fixed and variable
overhead are assigned to the product on the basis of direct labor hours . Moreover , Franklin analyzes
overhead variances on a four way basis . The actual data for the year ended November 30, 2006 are presented
below:
Actual production in units 198,000 Actual variable overhead P 352,000
Actual direct labor hours 440,000 Actual fixed overhead P 575,000

32. The standard hours allowed for actual production for the year ended November 30, 2019 was
a. 247,500 b. 396,000 c. 400,000 d. 495,000

33. Franklin’s variable overhead efficiency variance for the year was
a. P 33,000 U b. P 35,520 F c. P 66,000 U d. P 33,000 F

34. Franklin’s variable overhead spending variance for the year was
a. P 20,000 U b. P 19,800 F c. P 22,000 d. P 20,000 F

35. Franklin’s fixed overhead spending variance for the year was
a. P 19,000 F b. P 25,000 F c. P 5,750F d. P 19,000 U

36. The fixed overhead applied to Franklin’s production for the year was
a. P 484,200 b. P 575,000 c. P 594,000 d. P 600,000

37. Franklin’s fixed overhead volume variance for the year was
a. P 6,000 U b. P 19,000 F c. P 25,000 F d. P 55,00

38- 101 To produce 1,000 units of the product, the standard prime costs are as follows :
Direct materials Direct labor
Materials Kilos Per kilo Amount Type Hours Per hour Amount
A 500 P .10 P 50 X 30 P 5 P 150
B 350 .20 70 Y 20 3 60
C 400 .30 120 Z 50 2 100
1,250 240 100 310

Factory overhead has been estimated at the normal capacity of 1,200 hours as follows :
Fixed P 1,200 Variable P 2,400

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 In producing 10,000 units of the product , the company incurred factory overhead of
P 3,320 and the prime costs of;
Direct Materials Direct labor
Materials Kilos Per Kilo Amount Type Hours Per hour Amount
A 6,000 P .09 P 540 X 275 P 5.10 P 1,402.50
B 2,000 .22 440 Y 241 2.70 650.70
C 3,000 .33 990 Z 594 1.95 1,158.30
1,970
38. Material Mix Variance is a. P 70 b. P (212) c. P ( 430) d. P (288)

39. Material Yield Variance is a. P 70 b. P (212) c. P ( 430) d. P (288)

40. Material Price variance is a. P 70 b. P (212) c. P ( 430) d. P (288)

41. Labor rate Variance is a. P (155) b. P (74.50) c. P 713.00 d. P 372.00

42. Labor Efficiency Variance is a. P 372.00 b. P (74.50) c. P 713.00 d. P (155)

43. Labor Mix Variance is a. P 372.00 b. P (74.50) c. P 713.00 d. P (155)

44. Labor Yield variance is a. P 372.00 b. P (74.50) c. P 713.00 d. P (155)

45. Factory Overhead Controllable variance is a. P 360 b. P 690 c. P (100) d. P 90

46. Factory Overhead Volume Variance is a. P 360 b. P 690 c. P (100) d. P 90

47. Factory Overhead Efficiency Variance is a. P 360 b. P 690 c. P (100) d. P 90

48. Factory Overhead Yield Variance is a. P 360 b. P 690 c. P (100) d. P 90

Solution:

Actual Direct material Cost P 1,970

Less: Standard material cost ( 10,000 X P 0.24) 2,400
Direct material Cost variance P ( 430) F

SMC/unit = P240/1000 units = P 0.24

Standard Actual Quantity Material Price

Material Actual Price Price Difference Purchase variance
A 0.09 0.10 (0.01) 6000 (60)
B 0.22 0.20 0.02 2000 40
C 0.33 0.30 0.03 3000 90
P 70 U

Actual Quantity Standard Standard Material Mix

Material used Per/Kilos Quantity used Difference Price Variance
A 6000 500 40% 4400 1600 0.10 160
B 2000 350 28% 3080 (1080) 0.20 (216)

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 C 3000 400 32% 3520 (520) 0.30 (156)
11000 1250 100% 11000 P (212) F

Material Yield variance

Actual Output ( in units) 10,000
Less: Standard Output based on Input(11,000/1250) x1000 8,800
Difference 1,200 F
Multiplied by Standard Materials Cost per unit 0.24
P 288 F

Actual labor cost P 3,211.5

Standard labor Cost (10,000 X P 0.31 ) 3,100
Labor Cost variance P 111.5 U

SLC/unit = P310/1000 units = P 0.31

Labor Type Actual rate Standard rate Difference Actual hours Labor Rate Variance
X 5.10 5 0.10 275 27.5
Y 2.70 3 (0.30) 241 (72.3)
Z 1.95 2 (0.05) 594 (29.7)
9.75 10 (0.25) 1110 P (74.5) F

Actual Standard
Labor hours Standard hours based Standard
Difference Labor Mix Variance
Type worked hours on actual rate
on input
X 275 30 30% 333 (58) 5 (290)
Y 241 20 20% 222 19 3 57
Z 594 50 50% 555 39 2 78
1,110 100 1,110 0 10 P (155) F
Actual Output ( in units) 10,000
Less: Standard Output ( 1,110/9.75X 1000 units)
Difference
Multiplied by Standard Labor Cost per unit

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