ACYCST2 ONLINE LEARNING, TERM 3 AY 2019-2020

INSTRUCTOR-LED INDIVIDUAL ACTIVITY: STANDARD COSTING AND VARIANCE ANALYSIS (ADAPTED)

EXERCISE 1
In December, Sam Antari, president of Antari Inc., received the following information from Denise Sweet, the
new controller, in regard to November production of travel bags:

November production 4,800 bags

Actual cost of material purchase and used P14,550
Standard material allowed 0.5 square yard per bag
Direct Material quantity variance P600 U
Standard price per yard of material P6.00
Actual hours worked 9,760 hours
Standard labor time per bag 2 hours
Direct Labor rate variance P1,464 F
Standard labor rate per hour P17.00

Calculate the following:

1. Standard quantity of material allowed for November production.
2. Standard direct labor hours allowed for November production.
3. Direct Material price variance.
4. Direct Labor efficiency variance.

EXERCISE 2
Piedmont Manufacturing produces metal products with the following standard quantity and cost information:

DM: Aluminum 4 sheets @ P4 P16

DM: Copper 3 sheets @ P8 24
Direct labor 7 hours @ P16 112
Variable overhead 5 machine hours @ P6 30
Fixed overhead 5 machine hours @ P4 20

Overhead rates were based on normal monthly capacity of 6,000 machine hours. During November, the company
produced only 850 units because of a labor strike, which occurred during union contract negotiations. After the
dispute was settled, the company scheduled overtime to try to meet regular production levels. The following costs
were incurred in November:

DM: Aluminum 4,000 sheets purchased @ P3.80; used 3,500 sheets

DM: Copper 3,000 sheets purchased @ P8.40; used 2,600 sheets
Direct Labor 6,100 hours @ P16 (pre-contract settlement)
Variable overhead P23,300 (based on 4,175 machine hours)
Fixed overhead P18,850 (based on 4,175 machine hours)

Determine the following for November:

5. Variable overhead spending variance.
6. Variable overhead efficiency variance.
7. Fixed overhead spending variance.
8. Volume variance.

EXERCISE 3
Ripper Corp. established a standard cost on direct materials at P35 per unit. Actual cost of direct materials
fluctuated during the period. Of the 10,000 units purchased, 60% had a cost of P34.70, 20% were purchased at
P34.90 and the remaining units at cost of P35.60.

9. Calculate the actual cost of direct materials purchased.

EXERCISE 4
The following selected data were taken from the books of Hellier Contractors.

Standard wage rate P6.00

Actual wage rate ?
Standard hours allowed for actual production 10,000
Labor spending variance P11,400 U
Labor efficiency variance P8,400 U

10. What is the actual wage rate?

Page 1 of 2

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Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15 ed.). Pearson Education, Inc.
ACYCST2 ONLINE LEARNING, TERM 3 AY 2019-2020

INSTRUCTOR-LED INDIVIDUAL ACTIVITY: STANDARD COSTING AND VARIANCE ANALYSIS (ADAPTED)

EXERCISE 5
Skip Company produces product called Lem. The following information relates to the corporation's purchases
and use of material for the month of July:

Total yards of material

Direct materials purchased ........................................... 8,800
Direct materials used in production ............................. 8,000
Standard materials allowed in production .................... 8,200

Skip’s direct materials price variance for July was P2,200 favorable and the total direct material variance for July
was P3,200 favorable.

Calculate the following:

11. Standard price per yard of material.
12. Actual purchase price per yard of material.

EXERCISE 6
Bell Inc. uses a standard cost system. Information for raw materials for the month of March is as follows:

Standard unit price P1.60

Actual purchase price per unit ?
Actual quantity purchased 2,000 units
Actual quantity used 2,000 units
Direct material usage/quantity variance ?
Direct material price variance P120 F
Standard quantity allowed for actual production 1900 units

13. How much is the total direct material variance?

Page 2 of 2

th
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15 ed.). Pearson Education, Inc.