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Standard Costing Exercises

1. T-Top Company produces single-colored T-shirts. The following standards for one T-shirt have been

Direct Materials (0.5 yds. @ P2) P1.00

Direct labor (0.15 hrs. @ P9.00) 1.35

Standard prime cost P2.35

During the year, 20,700 yards of fabric were purchased and used in the production of 41,300 T-shirts.
The actual prime cost were:

Direct materials P 38,285

Direct Labor P 57,226 (for 6,200 hrs.)

REQUIRED: Compute the materials and labor variances associated with the production of T-shirts last
year, labelling each variance as favorable or unfavorable.

2. Likmuan, Inc., is a privately held furniture manufacturer. For August 2014, Likmuan had the following
standards for one of its products, a wheel chair:

Direct materials 2 square yards of input at P5 per square yard

Direct manufacturing labor 0.5 hour of input at P10 per hour

The following data were compiled regarding actual performance: actual output units(chairs) produced,
2,000; square yards of input purchased and used, 3,700; price per square yards,P5.10; direct
manufacturing labor costs, P8,820; actual labor hours of input, 900; labor price per hour, P9.80.


1. Show computations of price and efficiency variances for direct materials and direct manufacturing
2. Suppose 6,000 square yards of materials were purchased ( at 5.10 per square yard), even though
only 3,700 square yards were used. Suppose further that variances are identified at their most
timely control point; accordingly, direct materials price variances are isolated and traced at the time
of purchase to the purchasing department rather than to the production department. Compute the
price and efficiency variance.


Mediamet Company produces one product and uses a standard costing system. The direct labor
standard indicates that three direct labor hours should be used for every unit produced. The normal
production volume is 120,000 units of this product. The budgeted overhead for the coming year follows:

Fixed Overhead P864,000*

Variable overhead 1,440,000

*At normal value

Mediamet applies overhead on the basis of direct labor hours.

During the year, Mediamet produced 120,600 units, worked 361,800 direct labor hours, and incurred
actual fixed overhead costs of P940,320 and actual variable overhead costs of P1,443,500.

1. Compute the applied variable overhead
2. Compute the variable overhead spending and efficiency variances.
3. Compute the applied fixed overhead
4. Compute the fixed overhead spending and volume variances

Problem 4

Malabon Company uses a standard cost system. The standard cost card for one of its product shows
the following materials standards:


A 20 KILOS P 0.70 P14

B 5 0.40 2

C 25 0.20 5

50 kilos P21

The standard 50-kilo mix cost per kilo is 0.42(21/50 kilos). The standard mix should produce 40 kilos of
finished product, and the standard cost of finished product per kilo is P0.525(P21/40 kilos).

Materials of 500,000 kilos were used as follows:


A 230,000kilos P0.80 P184,000

B 50,000kilos 0.35 17,500

C 220,000kilos 0.25 55,000

The output of the finished product was 390,000 kilos

REQUIRED: Calculate the materials price, mix, and yield variances

Problem 5

A company uses a standard costing system in the manufacture of its single product. The 35,000 units of
raw materials purchased and used cost P105,000, and two units of raw materials are required to
produce one unit of final product. In October, the company produced 12,000 units of product. The
flexible budget for materials was 60,000, and there was an unfavourable static budget variance of


1. The companys standard price for one unit of material

2. The companys direct materials quantity variance
3. The number of outputs planned for in the companys static budget.