Instructions

MULTIPLE CHOICE: 1. Which of the following statements concerning standard costs is false? a. If properly used, standards can help motivate employees. b. All variances, whether favorable or unfavorable, should be investigated. c. Standard costs should be attainable under conditions of efficient operation. d. A standard cost system may be used with a process costing system or a job order costing system. 2. Standard costing is used to isolate the variances between standards costs and actual costs. It allows management to measure performance and correct inefficiencies, thereby helping to a. Allocate costs accurately. b. Determine the break-even point. c. Control costs. d. Eliminate management’s need for subjective decisions. 3. Both standard costs and budgeted costs are used for controlling costs. However, the two terms are not the same. Standard costs differ from budgeted costs in the standard costs a. Are based on the engineering studies while budgeted costs are historical costs. b. Costs that were incurred for actual production, while budgeted costs are costs that should have been incurred for such production. c. Are costs that should have been incurred for actual production, while budgeted costs are costs that should be incurred for budgeted or planned production. d. Are always expressed in total amounts, while budgeted costs are always expressed in per-unit amounts. 4. The difference between actual costs and standard cost is called a. Favorable variance b. Unfavorable variance

c. variance d. variable

5. Which of the following statements is correct? a. A standard costs system can never be used in both the job order and process costing systems. b. Standard costing can be used in job order costing, but not in process costing system.

c. Standard costing can be used in either the job order costing system or process costing system. d. A standard cost system can be used in process costing system, but not in job order costing system. 6. In a process costing system, equivalent units of production are computed to determine the number of complete units that could have been produced, given no beginning and ending work-in-process inventories. If a company uses standard costing in its process costing system, the equivalent units of production a. Are multiplied by the standard cost per unit to compute the total standard cost of units produced. b. Are never used. c. Are converted to standard equivalent unites and then multiplied by the actual cost per unit. d. Are assumed to be zero. 7. A variance shows a deviation of actual results from standard or budgeted results. In deciding whether to investigate a variance or not, management may consider the following factors, except a. The amount of the variance and the cost of investigation. b. Whether the variance is favorable or unfavorable. c. The possibility that investigation will eliminate future occurrences of the variance. d. The trend of the variances over time. 8. The following describe ideal standards, except a. Currently attainable standards. b. Theoretical or maximum efficiency standards. c. Make no allowances for waste, machine downtime, and spoilage. d. Perfection standards. 9. Which of the following does not describe practical standards? a. Currently attainable standards. b. Can be used for product costing and cash budgeting. c. Performance that is reasonably expected to be achieved with an allowance for normal spoilage, waste, and downtime. d. Negate the need to adjust standards if working conditions change

10. A standard cost is an estimate of what a cost should be under normal operation conditions. In establishing standard costs, the following organizational personnel may be involved, except a. Top management c. quality control personnel b. Budgetary accountants d. industrial engineers. 11. Because of the impact of fixed costs in most businesses, standard costing system is usually not effective unless the company also has a flexible budgeting system. In flexible budgeting, a. Standard costs are used to prepare budgets for multiple activity levels. b. Standard costs are never used. c. Variable costs and fixed costs show the same behavior as budgets for different activity levels are prepared. d. A budget for the expected activity level is prepare showing variable and fixed costs separately. 12. In a standard costing system, actual costs are compared with standard costs. The difference or variance is determined, and responsibility for such variance is assigned or identified to a particular person or department, in order to a. Determine who is at fault and render the appropriate punishment. b. Be able to set the correct selling price of the product. c. Use the knowledge about the variances to promote learning and continuous improvement in the manufacturing operations. d. Trace the variances to the proper inventory accounts so that they may be valued at actual costs. 13. This management practice involves giving significant attention only to those areas in which material variances from expectations occur, that is, giving less attention on areas operation as expected. a. Responsibility Accounting c. management by exception b. Management by objectives d. materials control 14. The materials efficiency variance is the difference between actual and standard quantities used in production, multiplied by the standard price. This variance may be the responsibility of a. Purchasing department c. production department b. Sales department d. personnel department 15. An unfavorable materials spending variance coupled with a favorable materials efficiency variance would most likely result from a. The purchase and use of lower than standard quality materials b. The purchase and use of higher than standard quality materials c. Problems involving machine efficiency d. Changes in product mix

16. For a recent month, the accountant’s standard cost variance analysis report showed a significant amount of unfavorable materials efficiency (quantity or usage) variance that warrants and investigation. The investigation of this variance should begin with the a. Personnel manager b. Purchasing manager only c. Production manager only. d. Production manager or purchasing manager 17. In two-way variance analysis, materials, labor, and variable overhead variances may be broken down into a. Price variance and spending variance b. Quantity or time variance and efficiency variance c. Spending variance and efficiency variance d. Spending variance and volume or capacity variance 18. The difference between the actual time used and the amount of time that should have been used for actual production, multiplied by the standard labor rate per time is called a. Efficiency variance b. Price variance c. Spending variance d. Rate variance 19. The difference between the actual price or rate paid and the standard price or rate that should have been paid, multiplied by the actual quantity or actual time is called a. Efficiency variance b. Quantity variance c. Time variance d. Spending variance ITEMS 20 TO 25 ARE BASED ON THE FOLLOWING INFORMATION: A company produces a product with the following standard costs: Materials, 2 pieces @ P5 per piece Labor 4 hours @ P8 per hour Variable Overhead 4 hours @ P6 per hour Fixed overhead* 4 hours @ P4 per hour Total Standard manufacturing cost per unit *based on capacity level of 5,000 units

P10 32 24 16 P82

20. If a flexible budget for 4,500 units, 5,000 units, and 5,500 units is prepared for a certain month, the budgeted costs are 4,500units

5,000units

5,500units

a. 369,000 410,000 451,000 b. 297,000 330,000 363,000 c. 377,000 410,000 443,000 d. 0 410,000 0 21. Assume that X is the number of units to be produced and TBC is the total budgeted cost, the flexible budget formula that the company may use to compute total budgeted cost for any value of X within the relevant range is a. TBC = 82x b. TBC = 66x c. TBC = 80,000 d. TBC = 66x + 80,000 22. Assume that during the month, the company actually produced 4,800 units and incurred actual total manufacturing costs of P400,000, how much is the flexible budget for the actual production? a. P400,000 b. 396,800 c. 393,600 d. 316,800 23. How much is the flexible budget variance for the month? a. 3,200 unfavorable b. 6,400 unfavorable c. 10,000 favorable d. 83,200 unfavorable 24. How much is the total standard cost that should have been incurred for the actual production of 4,800 units? a. 396,800 b. 400,000 c. 393,600 d. 316,800 25. How much is the total standard cost variance? a. 3,200 unfavorable b. 6,400 unfavorable c. 10,000 favorable d. 83,200 unfavorable

ITEMS 26 TO 28 ARE BASED ON THE FOLLWING INFORMATION: During July, a company’s direct materials costs for the production of Product X were as follows: Standard unit price Standard quantity allowed for actual production Actual unit purchase price Quantity purchased and used for actual production

P12.50 6,300 units P13 6,900 units

26. The total materials cost variance is a. P89,700 unfavorable b. P78,750 favorable c. P10,950 favorable d. P10,950 unfavorable 27. The materials efficiency or usage variance is a. P10,950 unfavorable b. P7,500 unfavorable c. P3,450 unfavorable d. P7,500 favorable 28. The materials spending variance or price variance is a. P3,450 unfavorable b. P 3,450 favorable c. P7,500 unfavorable d. 10,950 unfavorable ITEMS 29 AND 30 ARE BASED ON THE FOLLOWING INFORMATION E. Bernardo Corporation produces a product called “Earnest”. It uses a standard costing system and values its stock at standard cost. The standard cost of raw materials in product Earnest is: 4 kilos of material Y at P10 per kilo =P40 per unit of Earnest During May, the company purchased 14,200 kilos of Y at a cost of P170,200 or P12 per kilo. It produced 3,000 units of M using 12,600 kilos of Y. 29. What was the raw materials price variance for Material Y? a. P25,200 unfavorable b. P28,400 unfavorable c. P6,000 unfavorable d. P7,200 unfavorable 30. Which of the following is not correct? a. The total materials cost variance is P31,200 unfavorable b. The standard materials cost of the units produced is P120,000 c. The actual cost of materials used in production is P170,400 d. The materials efficiency is P6,000 adverse.

31. The materials mix variance for a product is P450 unfavorable and the materials yield variance is P150 unfavorable. This means that a. The materials price variance is P600 unfavorable b. The materials quantity variance is P600 unfavorable c. The total materials cost variance is definitely P600 unfavorable d. The materials price variance is also unfavorable, but the amount cannot be determined from the given information 32. Information on Chiong Companys materials cost for October 200A is as follows Actual Cost of direct materials Actual quantity of direct materials purchased and used Standard quantity of direct materials allowed for October production Direct materials efficiency variance

P126,000 45,000 pieces 43,500 pieces P4,500 unfavorable

For the month of October, what was Chiong’s direct materials spending variance? a. P4,200 unfavorable b. P4,200 favorable c. P9,000 favorable d. P9,000 unfavorable ITEMS 33 AND 34 ARE BASED ON THE FOLLOWING INFORMATION Maninang Company installs pre-fabricated stairs on residential houses. The standard materials cost for a low-cost house is P15,000 based on 2 units at a cost of P7,500 each. During May, Maninang Company installed stairs on 30 low-cost housing using 62 units at a cost of P7,450 or P461,900. 33. Maninang Company’s materials price variance is a. P3,100 unfavorable b. P3,100 favorable c. P15,000 unfavorable d. P15,000 favorable 34. Maninang Company’s materials usage variance is a. 3,100 unfavorable b. 3,000 favorable c. 15,000 favorable d. 15,000 unfavorable 35. Delilah Company produces “one-sizes-fits-all” rubber gloves and uses standard costing to account for its costs. Each unit ( a pair ) of finished product contains 0.50 meters of direct materials. However, a 20% direct material spoilage calculated on input quantities occurs during the production process. The cost of direct materials is P10 per meter. How much is the standard direct materials cost per unit of the finished product?

a. 6.25 b. 4.00 c. 16 d. 5 ITEMS 36 TO 38 ARE BASED ON THE FOLLOWING INFORMATION: Samson Company uses a standard costing system in the production of its only product. The 84,000 units of raw materials inventory were purchased for P126,000 and 4 units of raw materials are required to produce one unit of final product. In October, the company produced 14,400 units of product. The standard cost allowed for materials was P72,000, and there was an unfavorable usage variance of P3,000. 36. Samson Company’s standard price for one unit of materials is a. 1.25 b. 1.50 c. 2.50 d. 3.00 37. The units of materials used to produce the October output totaled a. 57,600 b. 18,000 c. 60,000 d. 55,200 38. The materials price variance for the units used in October was a. 15,000 unfavorable b. 15,000 favorable c. 3,000 unfavorable d. 3,000 favorable ITEMS 39 TO 41 ARE BASED ON THE FOLLOWING INFORMATION: A manufacturer of portable DVD players buys components from subcontractors for assembly into complete DVD players. Each player requires 6 units of Part A, which has a standard cost of P100 per unit. During May, the company’s records showed the following with respect to Part A: Purchases Purchase Price Units of players produced Units of Part A used in production

15,000 units P110 per unit 2,000 12,400

39. For the month of May, the company’s materials purchase price variance is a. 40,000 unfavorable b. 40,000 favorable c. 150,000 unfavorable d. 150,000 favorable

40. During May, the company incurred materials usage variance of a. 40,000 unfavorable b. 40,000 favorable c. 150,000 unfavorable d. 150,000 favorable

41. The amount that will be shown on a flexible budget for Part A usage during the month of May is a. 1,200,000 unfavorable b. 1,200,000 c. 1,320,000 d. 200,000 ITEMS 42 TO 47 ARE BASED ON THE FOLLOWING INFORMATION: Calzada Company produces Four-Season Drinks by mixing juices of four fruits in season. The standard costs and input for a 50-liter batch of the juice are as follows: Fruits Santol Mango Pineapple Tamarine Total

Standard Input Quantity in Liters 20 10 25 5 60

Standard Cost Per Liter P10.00 21.25 7.50 15.00

Total Standard Cost P200.00 212.50 187.50 75.00 P675.00

The quantities purchased and used during the current month are shown below. A total 14 batches were produced during the month. Fruits Santol Mango Pineapple Tamarind Total

Quantity Purchased (Liters) 300 150 350 80 1,450

Purchase Price P9.50 22.00 7.20 15.40

42. How much is the total materials cost variance? a. 452 unfavorable b. 160 favorable c. 1,415 unfavorable d. 2,027 unfavorable 43. The materials purchase price variance is a. 110.50 favorable b. 122.50 favorable c. 160.00 unfavorable d. 2,027 unfavorable

Quantity Used (Liters) 290 130 350 75 775

44. The materials usage price variance is a. 110.50 favorable b. 122.50 favorable c. 93.75 favorable d. 56.25 unfavorable 45. The market mix variance is a. 160.00 favorable b. 122.50 favorable c. 56.25 unfavorable d. 93.75 favorable 46. The materials yield variance is a. 160.00 favorable b. 122.50 favorable c. 93.75 favorable d. 56.25 unfavorable 47. The materials quantity variance is equal to a. The yield variance b. The total of materials mix and yield variances c. The total of the price, mix, and yield variances d. The mix variance ITEMS 48 AND 49 ARE BASED ON THE FOLLOWING INFORMATION: Aristeo Company produced 3,200 units of product. Each unit requires 2 standard hours. The standard labor rate is P15 per hour. Actual direct labor for the period was P79,200 (6,600 hours x P12)/ 48. What is the direct labor time variance? a. 19,800 favorable b. 16,800favorable c. 6,400 unfavorable d. 3,000 unfavorable 49. What is the direct labor rate variance? a. 19,800 favorable b. 16,800 favorable c. 6,400 unfavorable d. 3,000 unfavorable

ITEMS 50 AND 51 ARE BASED ON THE FOLLOWING INFORMATION: Dagalangit Company uses a standard cost system. The following information pertains to direct labor for Product A for the month of March: Standard rate per hour Standard hours allowed for actual production Actual rate per hour Labor efficiency variance – unfavorable

P12.00 3,000 hours P12.60 P2,400

50. What were the actual hours worked? a. 3,200 b. 2,800 c. 3,000 d. 3,190 51. What is the standard time required for each unit of product? a. 3,000 b. 3,200 c. 200 d. Cannot be determined from the given information ITEMS 52 AND 53 ARE BASED ON THE FOLLOWING INFORMATION: Information on Zamora Company’s direct labor costs for the month of February is as follows: Total direct labor payroll Favorable direct labor efficiency variance Actual direct labor hours Difference between actual time and standard time 52. what is the company’s direct labor rate variance? a. 16,800 unfavorable b. 16,800 favorable c. 16,560 unfavorable d. 13,800 favorable 53. What is the company’s total direct labor cost variance? a. P14,000 unfavorable b. 2,560 favorable c. 16,560 unfavorable d. 400 favorable

P193,200 2,560 27,600 400 hours

54. For the month of June, M. Garcia Company’s records disclosed the following data relating to direct labor: Actual Cost P25,000 Spending variance 2,500 favorable Efficiency variance 3,750 unfavorable Standard cost P23,750 The actual direct labor hours used during June was 5,000 hours. How much was the company’s standard direct labor rate per hour? a. P5.00 b. P4.50 c. P5.50 d. P4.75 55. J. Valencia Company’s direct labor costs for the month of October were as follows: Standard rate per hour P25.20 Standard direct labor hours 84,000 hours Actual direct labor hours 80,000 hours Direct labor rate variance P67,200 favorable What was J. Valencia Company’s total direct labor payroll for the month of October? a. P1,952,000 b. P2,080,000 c. P1,948,800 d. P2,083,200 ITEMS 56 AND 57 ARE BASED ON THE FOLLOWING INFORMATION: Charis Corporation produces a single product with a standard direct labor cost of 4 hours @ P12 per hour. During May, 1,000 units were produced using 4,100 hours @ P12.20 per hour. 56. The direct labor efficiency variance is a. P1,200 unfavorable b. P400 unfavorable c. P420 unfavorable d. P1,220 unfavorable 57. The total labor cost variance is a. P1,200 unfavorable b. P820 unfavorable c. P2,020 favorable d. P20,020 unfavorable

ITEM 58 TO 60 ARE BASED ON THE FOLLOWING INFORMATION: A major activity at the Professional Regulation Commission is the processing of application forms for the Board Examinations of the various professions under its control. To analyze and control the costs incurred in the Applications Department, the PRC’s accountant previously prepared the following budgeted data for the year 200A: Normal number of applications processed per year Budgeted variable costs of processing the 150,000 applications Fixed cost per year Number of hours per 100 applications processed Wage rate per 100 applications

150,000 P10,500,000 2,500,000 200 hours P6,000

During the year 200A, the department processed a total of 120,000 applications using 250,000 hours. The cost incurred were: Total costs P11,140,000 Labor costs 7,500,000 58. For 200A, the application Department’s total cost to process the 120,000 applications assuming standard performance should be a. P13,000,000 b. P10,900,000 c. P10,500,000 d. P8,400,000 59. The total labor cost variance for 200A is a. 300,000 unfavorable b. 300,000 favorable c. 1,200,000 unfavorable d. 1,860,000 favorable 60. The total direct labor cost variance may be broken down into: Spending Variance Efficiency Variance a. 1,200,000 unfavorable 10,000 unfavorable b. 1,860,000 unfavorable 300,000 unfavorable c. 300,000 unfavorable P0 d. P0 300,000 unfavorable

ITEMS 61 TO 63 ARE BASED ON THE FOLLOWING INFORMATION: The accountant of Trinidad Company prepared the following cost analysis report on direct labor costs for the jobs completed during the previous months: Job

Actual Hours at Actual Rate

Actual Hours at Standard Rates

Standard Hours at Standard Rates

105

P2,270

2,590

2,170

110

10,740

10,970

10,500

117

4,730

4,900

4,620

120 Totals

13,850 31,590

13,600 32,060

13,480 30,770

61. What is the total flexible budget direct labor variance for the jobs completed? a. 470 favorable b. 820 unfavorable c. 1,290 unfavorable d. 32,060 62. What is the labor rate variance? a. 470 favorable b. 820 unfavorable c. 1,290 unfavorable d. 32,060 63. What is the labor time variance? a. 470 favorable b. 820 unfavorable c. 1,290 unfavorable d. 32,060 64. Edward V. Company’s record show the following data pertaining to one of its products: Actual production 1,800 units Standard labor hours allowed per unit 2 hours Standard labor rate per hour P6 Actual hours worked 3,690 hours Labor rate variance P740 unfavorable Labor efficiency variance 540 unfavorable What was the actual labor cost? a. 21,600 b. 1,280 c. 22,140 d. 22,880

ITEMS 65 TO 67 ARE BASED ON THE FOLLOWING INFORMATION: Johanna Corporation had the following flexible budget figures for the month of April: Materials (1,000 units at P15 per unit) P15,000 Direct Labor (1,000 units at 45 minutes per unit) 75,000 During April, actual data are as follows: Actual production Materials costs Direct labor

850 units P12,750 57,375

65. The materials cost variance is a. P0 b. P2,250 unfavorable c. P2,250 favorable d. P12,750 66. The total direct labor cost variance is a. 17,625 favorable b. 31,350 favorable c. 6,375 favorable d. 11,250 favorable 67. The direct labor cost variance is a. P0 b. Composed of time variance and rate variance c. Composed of time variance only d. Composed of rate variance only ITEMS 68 TO 73 ARE BASED ON THE FOLLOWING INFORMATION: Asnawie Company’s factory workers who have a direct hand in manufacturing its products are grouped into three (3) classes – Classes A, B, and C. For the first quarter of 200A, the standard labor rates and standard time allowed for actual production were: Class

A B C Totals

Standard Labor Hours Allowed for Production 300 hours 400 500 1,200 hours

Standard Labor Rate per Hour P12.00 10.50 7.50

Total Standard Labor Cost P3,600 4,200 3,750 P11,550

At the beginning of the quarter, a new wage law took effect, increasing the wage rates by an average of 20%. The standard wage rates were not revised. During the period, the company paid the following wage rates for the actual hours used:

Class A B C Totals

Actual Rates P14.40 12.60 9.00

Actual Hours 350 380 520 1,250

Total Actual Labor Cost 5,040 4,788 4,680 14,508

68. What is the total labor cost variance? a. 2,958 unfavorable b. 2,418 unfavorable c. 540.00 unfavorable d. 58.75 unfavorable 69. What is the labor rate variance? a. 2,958 unfavorable b. 2,418 unfavorable c. 540.00 unfavorable d. 58.75 unfavorable 70. What is the total labor time variance? a. 2,958 unfavorable b. 2,418 unfavorable c. 540.00 unfavorable d. 58.75 unfavorable 71. The labor mix variance is a. 2,958 unfavorable b. 2,418 unfavorable c. 540.00 unfavorable d. 58.75 unfavorable 72. The labor yield variance is a. 481.25 unfavorable b. 58.75 unfavorable c. 540 unfavorable d. 2,418 unfavorable 73. Which of the following statements if correct? a. The production manager should be held responsible for the unfavorable rate variance. b. The labor time variance may be further analyzed by breaking it down into labor mix and yield variances. c. The personnel manager should be held responsible for the unfavorable rate variance.

d. The labor mixed yield variance analysis is applicable only to material costs. 74. The following direct labor information pertains to the production of Product A: Standard time per unit Number of direct factory workers Number of productive hour per month, per worker Monthly wages per worker Worker’s benefit treated as direct labor cost

4 direct labor hours 40 workers 240 hours P8,400 10% of wages

How much is the standard direct labor cost per unit of Product A? a. 38.50 b. 140.00 c. 154.00 d. 3.85 ITEMS 75 TO 79 ARE BASED ON THE FOLLOWING INFORMATION: The following information pertains to Biscocho Company’s production of one unit of Product A: Quantity Price Cost Per Unit Materials – standard 7.5 kgs. P0.30/kg P2.25/unit Labor – standard 0.6 hr. 10.00/hr 6.00/unit During the period, the company produced 15,000 units of Product A. It purchased 140,000 kgs of materials at P0.25 per kilo. It incurred direct labor cost of P90,780 at P10.20 per labor hour used. At the end of the period, the company’s inventory of materials increased by 25,000 kgs. The company recognizes the materials price variance when materials are purchased. 75. How much was the company’s materials price variance? a. 5,750 unfavorable b. 5,750 favorable c. 7,000 unfavorable d. 7,000 favorable 76. What was the company’s materials efficiency variance? a. 750 unfavorable b. 1,000 favorable c. 2,500 favorable d. 625 unfavorable 77. The company’s labor efficiency variance during the period was a. 1,020 favorable b. 100 favorable c. 1,000 favorable d. 780 unfavorable

78. The direct labor spending variance for the period was a. 1,800 unfavorable b. 1,780 unfavorable c. 3,000 unfavorable d. 1,000 favorable 79. The total prime cost variance is a. 5,000 favorable b. 780 unfavorable c. 5,780 favorable d. 4,220 favorable 80. The total factory overhead variance is a. The difference between the actual factory overhead costs incurred and the standard factory overhead costs allowed for the actual production b. The sum of the actual factory overhead costs incurred and the standard factory overhead costs allowed for the actual production. c. The difference between the actual fixed overhead costs incurred and the standard fixed overhead costs allowed for the actual production. d. The difference between the actual variable factory overhead costs incurred and the standard variable overhead costs allowed for the actual production. 81. One way of analyzing the variable factory overhead variance is by breaking it down into a. b. c. d.

variable overhead spending and efficiency variance variable overhead spending and rate variances variable overhead efficiency and time variances actual and standard overhead cost

82. One way if analyzing the fixed factory overhead variances is by breaking it down into a. b. c. d.

fixed overhead spending and volume variances fixed overhead spending or volume variances fixed overhead spending and budget variances fixed overhead volume and capacity variances

83. Variable overhead is applied on the basis of standard direct labor hours. If, for a given period, the direct labor efficiency variance is favorable, the variable overhead efficiency variance will be a. a. favorable

c. zero

b. b. unfavorable efficiency variance

d. the same amount as the labor

84. If factory overhead is applied on the basis of output, the variable factory overhead efficiency variance will be a. b. c. d.

equal to the direct labor efficiency variance unfavorable, if actual production is less than the budgeted production favorable, if actual production is greater than budgeted production zero

85. Under the two-way variance analysis (two variance method) for factory overhead, the difference between the actual factory overhead cost incurred and the factory overhead applied to actual production is called a. a. volume variance b. b. controllable variance

c. efficiency variance d. total or net overhead variance

86. Under the two-variance method for analyzing factory overhead, which of the following variances are composed of both variable and fixed overhead elements? a. b. c. d.

controllable or budget variance only Volume or capacity or variance only Both controllable and volume variances Neither controllable nor volume variances

87. Under the two variance method for analyzing factory overhead, controllable or budget variance is computed by subtracting from actual factory overhead costs incurred the a. b. c. d.

budget allowance based on actual hours budget allowance based on standard hours budget allowance based on normal hours budget allowance based on budgeted hours

88. Under the three variance method for analyzing factory overhead, the budget or spending variance is the difference between the actual factory overhead costs incurred and the

a. b. c. d.

budget allowance based on actual input budget allowance based on actual output budget allowance based on standard input budget allowance based on standard output

89. Fredenita Company uses two variance method for analyzing its factory overhead costs. It allocates factory overhead based on 100% of practical capacity. Almost always, unfavorable variances are reported. For the coming period, Fredenita Company’s management is planning to change the denominator level for allocating factory overhead- from 100% to 80%. If this change were effected, which of the following variances would be affected? a. Controllable b. NO c. YES d. NO e. YES

Volume NO YES YES NO

90. The standard fixed factory overhead rate is computed based on a selected denominator level, i.e., a predetermined activity level. If the standard hours allowed for actual production is equal to this predetermined activity level for a given period, the volume variance will be a. a. favorable b. b. unfavorable compute

c. zero d.

impossible

to

91. Which of the following standard cost variances would be least controllable by a production supervisor? a. a. Material efficiency efficiency b. b. Labor efficiency

c.

Variable

overhead

d. Overhead volume

92. Larcy Corporation uses a full- absorption standard costing system in accounting for its production costs. The factory overhead costs are applied based on direct labor hours.

a. Larcy Corporation’s choice of a production volume or capacity level as a denominator for calculating its factory overhead rate will affect b. c. d. e.

The fixed factory overhead budget variance The variable overhead application rate The fixed overhead application rate The total amount of budgeted fixed overhead cost

93. Bulsky Corporation will have an overhead volume variance during a period if a. b. c. d.

its production exceeds sales its actual production is not equal to the predetermined activity level actual fixed overhead cost is not equal to its budgeted fixed overhead cost its actual hours work is not equal to the standard hours allowed for good output

94. The amount of fixed factory overhead that RRR Corporation will apply to actual production is the a. actual production times the standard time allowed per unit time the standard fixed overhead application rate. b. actual production times the actual time allowed per unit c. actual production times the actual time allowed per unit times the actual fixed overhead application rate d. actual production times the standard time allowed per unit times the actual fixed overhead application rate.

e. ITEMS 95 TO 99 ARE BASED ON THE FOLLOWING INFORMATION: f. Doc Corporation has a standard absorption and flexible budgeting system. Information about the factory overhead cost for X Corporation’s February production activity follows:

g. Standard variable overhead rate per direct labor hour P24 h. Stand fixed overhead rate per direct labor hour 12 i. Total factory overhead application rate P36 j.

Standard direct labor hours allowed for actual production 6,000 hours k. Budgeted fixed factory overhead cost P75, 000 l. Actual total factory overhead cost incurred P220, 000 m. The actual fixed overhead cost incurred was in agreement with the budget. The company uses two variance method for analyzing factory overhead cost variances. 95. The net factory overhead variance is a. a. P4, 000 unfavorable unfavorable b. b. P.3, 000 unfavorable

c.

P1,

000

d. P0

96. If the total overhead variance is broken down into variable and fixed variances, the amounts are: Variable OH Variance Fixed OH Variance a. P3, 000 unfavorable P1, 000 unfavorable b. 1,000 unfavorable 3,000 unfavorable c. 4,000 unfavorable 0 d. 0 4,000 unfavorable 97. The controllable variance amounts to a. a. P0 unfavorable b. b. P4, 000 unfavorable unfavorable 98. The volume variance amounts to a. a. P0 unfavorable

c.

P1, d.

c.

P1,

000 P3,

000

000

b. b. P4, 000 unfavorable unfavorable

d. P3, 000

99. The fixed overhead spending or budget variance is a. a. P0 unfavorable b. b. P4, 000 unfavorable unfavorable

c.

P1, d.

000 P3,

000

100. Abegael Corporation has total over applied overhead of P5, 000. Additional information is as follows: Variable OH Fixed OH TOTAL Applied based on standard Direct labor hours allowed P33, 600 P24, 000 P57, 600 Budgeted based on standard Direct labor hours allowed 30,400 21,600 52,000 What is the actual total overhead? a. P62,600 c. P57, 600 b. P52, 600 d. P47, 000 ITEMS 101 TO 102 ARE BASED ON THE FOLLOWING INFORMATION: Villaberde Corporation’s standard cost system contains the following overhead costs, computed based on a monthly normal volume of 25, 000 units or 50, 000 direct labor hours: Variable Factory Overhead per unit Fixed Factory Overhead per unit Total P20

P12 8

The following info pertains to the month of April 200A: Actual FOH cost incurred: Variable

P316, 680

Fixed Actual Production Actual Direct labor hours worked 101.

225,000 26,000 units 54,600 hours

The total FOH cost variance is a. P25,000 unfavorable unfavorable b. P17,000 unfavorable unfavorable

102.

103.

104.

105.

106.

The variable overhead variance amounts to a. P25,000 unfavorable unfavorable b. P17,000 unfavorable unfavorable The variable overhead spending variance is a. P16, 680 unfavorable favorable b. P4, 680 unfavorable unfavorable

The variable overhead efficiency variance is a. P15,600 unfavorable unfavorable b. P10,920 favorable unfavorable The fixed overhead variance amounts to a. P25,000 unfavorable unfavorable b. P17,000 unfavorable unfavorable

c. d.

P21,680 P4,

c.

680

P21,680

d.

P4,

680

c.

P10,

920

d.

P12,

000

c.

P4,680

d.

12,

000

c.

P8,

000

d.

P6,

600

The fixed overhead budget or spending variance amounts to a. P0 c. P17, unfavorable b. P8,000 unfavorable d. P25, unfavorable

000 000

107.

The fixed overhead volume or capacity variance amounts to a. P8, 000 unfavorable c. P25,000 unfavorable b. P8,000 unfavorable d. P25, 000 favorable

108.

Using the two variance method, the controllable variance is a. P21,680 unfavorable c. P29,680 unfavorable b. P14, 680 unfavorable d. P15, 600 unfavorable

109.

Under the two variance method, the controllable variance consist of a. b. c. d.

Variance spending, variable efficiency, and fixed spending variances Variable spending, variable efficiency and volume variances Variable spending, variable efficiency and fixed efficiency variances Variable cost variances only

110. Using the three variance method for analyzing FOH variance, the budget or spending variance amounts to a. P4, 680 unfavorable c. P25, 000 unfavorable b. P14,080 unfavorable d. P13, 680 unfavorable 111. Using the three variance method for analyzing FOH, the budget or spending variance consist of the a. b. c. d.

112. is

Fixed budget or spending variance only Variable variances and fixed spending variance Variable spending and fixed spending variances Difference between the budgeted FOH based on normal activity level and actual total FOH

Under the three variance method for FOH analysis, the efficiency variance

a. The variable efficiency variance of P15,000 unfavorable b. The variable efficiency variance of P15, 600 unfavorable and volume variance of P8, 000 favorable c. Equal to P8, 000 favorable

d. Never computed ITEMS 113 AND 114 ARE BASED ON THE FOLLOWING INFORMATION: Gamboa Corporation uses a predetermined FOH rate based on direct labor hours. For the month of November, the following are the budgeted and actual data for Gamboa Corporation: Budgeted FOH (base on budgeted volume of 50, 000 direct labor hours) 000 Actual FOH (for actual DLH of 55,000 hrs.)

P150, 162,500

113. If the FOH is applied to direct labor hours, how much was the over applied or under applied FOH? a. P2, 500 over applied c. P12,500 over applied b. P2, 500 under applied d. P12,500 under applied 114. If the actual FOH was in agreement with the budgeted FOH, the variable OH rate per hour and the total fixed FOH rate were

a. b. c. d.

Variable rate per hour P2.50 3.00 3.00 0.50

Total Fixed OH P25,000 150,000 162,500 25, 000

115. Aguisanda Corporation uses a predetermined FOH application rate based on the direct labor cost. For the year ended December 31, 200A, some budgeted and actual data are as follows:

FOH Direct Labor Cost Direct Labor hours

Actual P310, 000 210, 000 26, 000

Budgeted P300, 000 200,000 25,000

For 200A, Aguisanda Corp.’s over applied or under applied FOH was? a. P5000 under applied c. P10000 under applied b. P5000 over applied d. P10000 over applied 116. Cliff John Corp. uses a flexible budget system and prepared the ff. information for 200A:

Percent of Capacity 100% DL Hours 30,000 Variable FOH 60,000 Fixed FOH 108,000 Total FOH rate per DL hour

80% 24,000 48,000 108,000 6.50

5.60

Cliff John Corp operated at 80% of capacity during 200A, but applied FOH base on the 90% capacity level. If the actual FOH was equal to the budgeted amount for the attained capacity, how much was OH variance for the year? a. P21600 under applied b. P24000 over applied

c. P12000 under applied d. P 6000 over applied

ITEMS 117 AND 120 ARE BASED ON THE FOLLOWING INFORMATION: Following are the data about Ganaba Corp.’s fixed and variable OH for the month of May: Actual Fixed OH 000 Variable OH ?

Flexible Budget

Applied P120, 000

Variable OH rate variance Volume Variance Standard Variance OH rate per hour P20

?

80,000

P125, 90,000

P2000 U P5000 F

117. How efficient or inefficient is Ganaba Corp. in terms of using direct labor hours as an activity base? a. 600 hours efficient b. 600 hours inefficient 118.

What was the total budgeted fixed FOH?

c. 400 hours efficient d. 400 hours inefficient

a. P115, 000 b. 130,000

119.

How much is the fixed FOH spending variance? a. P0 b. P5, 000 info.

120.

c. 125, 000 d. 120, 000

c. P120, 000 d. cannot be determined from the given

The fixed OH efficiency variance is a. P5, 000 favorable b. P5, 000 unfavorable

c. P10, 000 favorable d. never a meaningful variance

ITEMS 121 AND 127 ARE BASED ON THE FOLLOWING INFORMATION: Fabrigar Corp. produces a product that is distributed all over the country. The corporation uses a standard costing system and applies factory overhead based on planned machine hours using a predetermined annual rate. For the year 2008, the following planned figures were made available: 2008 budgeted data Fixed FOH Variable FOH DL hours Machine hours

P 960,000 1, 920, 000 38,400 192, 000

During January 2008, the company incurred fixed FOH cost of P80, 960 and variable FOH cost of P 171, 200. Data regarding labor and machine hours for the month are as follows: Actual Budgeted based on actual production DL Hours 3,360 Machine hours 17,280 121.

The predetermined FOH application rates are

3,200 16,800

a. b. c. d. 122.

Variable FOH P50.00 P10.20 P10.00 P9.90

Fixed FOH P25.00 P4.80 P5.00 P4.69

The total amount of FOH applied to production for January was a. P252, 000 b. P259, 000

123.

The amount of over applied or under applied FOH for January was a. 7040 over applied b. 3200 under applied

124.

c.P4,000 favorable d P4, 000 unfavorable

The FOH controllable variance for January was a. P4160 unfavorable b. P4160 favorable

127.

c.P4,000 favorable d P4, 000 unfavorable

The fixed OH volume variance in January was a. P960 favorable b. P960 unfavorable

126.

c.252000 applied d.160 under applied

The fixed FOH spending variance for January was a. P960 favorable b. P960 unfavorable

125.

c. P48, 000 d. P252, 160

c.P3200 unfavorable d P4000 favorable

The variable FOH variance for January was a. P4160 favorable b. P4000 favorable

c.P3200 favorable d P3200 unfavorable

ITEMS 128 AND 134 ARE BASED ON THE FOLLOWING INFORMATION:

Flodarose Apparel, Inc. produces housedresses of one quality. The housedresses are produced in batches to fill each special order from its customers, mostly stall owners in malls located in various cities. Flodarose sews the customer’s labels on the housedresses. The standard costs for a dozen housedresses are: Material 320 Labor P 735 Factory Overhead P600 Standard cost per dozen P2, 655

24 meters @ P55

P1,

3 hours @ P245 3 hours @ P200

During Dec. 200A, Flodarose worked on three orders, for which, the job cost sheets show the following: Units in Batch Batch A B C

material used (Dozen) 100 170 120

Hours Worked (Meter) 2,140 4,044 2,882

298 513 289

Actual data pertaining to December production: Actual quantity of material purchased Purchase of cost of materials

9,500 m. P532, 000

Materials price variance is recognized when materials are purchased. All inventories are carried at standard cost. Actual DL cost during December 000 Actual labor time used in production

1,100 hours

Actual factory overhead cost incurred in December

P228, 000

Budgeted Data- FOH

P275,

Total budgeted FOH for year 200A based On the plant’s normal capacity of 4, 800 dozen Of housedresses annually 880, 000

P2,

40% of the total budgeted FOH is fixed Flordarose applies FOH to production on the basis of the DL hours Work in Process There was no work in process at Dec. 1 As of Dec. 31, only Batch C was still in process, which was 80% complete as to direct labor 128.

The standard cost of production for the month of December 200A is a. P1,035,450 b. P1,003,410

129.

The materials purchase price variance for December was a. P8, 016 unfavorable unfavorable b. P9,184 unfavorable unfavorable

130.

d.

P17,200 P9,

500

c. 552 unfavorable d. 164 favorable

The total labor efficiency variance in hours is a. 70 favorable b. 17,150 favorable

132.

c.

The net materials quantity variance is a. 24 favorable b. 1,320 favorable

131.

c. P971, 730 d. P716, 850

c. 490 unfavorable d. 402 unfavorable

The total labor rate variance in pesos is a. P5, 500 unfavorable unfavorable b. P1, 100 unfavorable unfavorable

c.

P5,

990

d.

P

490

133.

The controllable FOH variance for December was a. P240 unfavorable unfavorable b. P240 favorable unfavorable

134.

c.

P3,

880

d.

P96,

240

The total non- controllable (volume) FOH variance for December was a. P240 unfavorable unfavorable b. P8, 160 unfavorable unfavorable

c.

P8,

400

d.

P7,

920

ITEMS 135 AND 144 ARE BASED ON THE FOLLOWING INFORMATION: Alago and Company, CPAs, prepares income tax returns (ITR) for individual taxpayers. The company uses the weighted average method and actual costs for financial reporting purposes. However for internal reporting, Alago uses the FIFO method and a standard cost system. The standards, based on equivalent performance have been established as follows: Standard Time per ITR Rate per hour Labor cost 5 hours P500 Overhead 5 hours 250

Cost per ITR P100 50

For March 200A, budgeted overhead is P245, 000 Additional information for March performance: In-process data: ITRs in process, March 1 (25% complete) ITRs started in March ITRs in process, March 31 (80% complete) Actual costs: ITRs in process, March 1: Labor Overhead 12,500

100 800 200

P30,000

Labor, month of March 4,000 hours Overhead, month of March 224, 860

344,960

135. The equivalent units of performance for labor and overhead using the weighted average method is a. 860 b. 835 136.

c. 740 d. 700

The actual cost per equivalent units are

a. b. c. d. 137.

Labor P401 436 417 538

Overhead P262 276 264 339

The actual cost of ITRs in process at March 31, is a. P42, 500 b. P53, 400

138.

c. P113, 920 d. P142, 400

How much is the standard cost per ITR?

a. P150 b. P750

c. P712 d. P765

139. The equivalent units for current production under the FIFO method is a. 885 b. 600

c. 860 d. 835

140. What was the labor rate variance in March? a. P72, 540 favorable b. P85, 040 favorable

c. P17,500 favorable d. P55, 040 favorable

141. How much was the labor time variance in March? a. P72, 540 favorable b. P85, 040 favorable

c. P17,500 favorable d. P55, 040 favorable

142. What was the total FOH cost variance? a. P32, 250 unfavorable b. P16, 110 unfavorable

c. P20, 140 favorable d. P 7, 640 favorable

143. What was the total OH budget variance? a. P32, 250 unfavorable b. P16, 110 unfavorable

c. P20, 140 favorable d. P 7, 640 favorable

144. What was the company’s volume variance in units? a. 180 under absorbed b. 60 under absorbed

c. 280 under absorbed d. 145 under absorbed

ITEMS 145 AND 147 ARE BASED ON THE FOLLOWING INFORMATION: S. Fortunato Soap Inc. uses a standard cost system in its Powder soap division. The standard cost of manufacturing one sack of Sabong Pulbos is as follows: Materials Labor Factory Overhead Total standard cost per sack

48 kilos @ 75 per kilo 4 hours @ P40 per hour P50 per direct labor hour

P3, 600 P160 P200 P3, 960

The budgeted fixed FOH is P14, 400 for a normal monthly production of 180 sacks of Sabong Pulbos. During the month, S. Fortunato Soap produced 160 sacks of Sabong Pulbos. The actual cost were: Material purchased and used- 7, 700 kilos at P73 per kilo Labor- 650 hours at P38 per hour

FOH: Fixed Variable Total actual cost

145. The materials cost variances are:

P562, 100 24,700

14,400 20, 800 P622, 000

a. b. c. d.

Spending P15,400 F P1, 500 U P15, 360 F P 1, 460 U

Efficiency P1, 500 U P15, 400 F P1, 460 U P15, 360 F

146. The labor cost variances are:

a. b. c. d.

Spending P 400 U P1, 300 F P400 U P 1, 280 F

Efficiency P1, 300 F P400 U P900 F P380 U

147. The factory overhead cost variances are:

a. b. c. d.

Controllable P3, 200 U P1, 600 F P1,600 U P0

Volume P1, 000 U P1,600 F P1, 600 U P3, 200 U