Name: Score:

PROF. MARK LESTER T. BALASA, CPA, MBA Date:

STANDARD COSTING:
AAA Company has a budgeted normal monthly capacity of 5,000 labor hours with a standard
production of 4,000 units at this capacity. Standard costs are:
Materials 2 kilos at P1.00
Labor P8.00 per hour
Factory overhead at normal capacity
Fixed expenses P5,000
Variable expenses P1.50 per labor hour

During January, actual factory overhead total P11,250 and 4,500 labor hours cost P33,750. Production
during the month was 3,500 units using 7,200 kilos of materials at a cost of P1.02 per kilo.
Required:
1) Controllable Variance ______________
2) Spending Variance ______________
3) Efficiency Variance ______________
4) Volume Variance ______________

During August, 2021, a company produced 1,000 units of a product using 3,600 pounds of direct
material at a cost of P2.20 per pound. The direct material standard requires 4 pounds of material per
unit of product at a standard price of P2.00 per pound.

5. The material quantity variance is:

a. P880 unfavorable b. P880 favorable c. P800 favorable d. 800 unfavorable

The standard direct labor cost for a product is 3 hours at P6 per hour. Budgeted production was 10,000
units for the year and actual production was 12,000 units. Actual direct labor cost was P210,375 for
38,250 hours.

6. Compute for (1) the labor rate variance and (2) labor efficiency variance
(1) P19,125 F and P13,500 U (1) P19,125 F and P49,500 U
(1) P19,125 U and P13,500 F (1) P19,125 U and P49,500 F

The following data are used for questions 7 to 11

The AAA Company build wooden bookshelf wall units. The company’s standard costs are:
Wood 25 pounds at P6.40 per pound
Trim 8 pounds at P10.00 per pound
Direct labor 5 hours at P12.00 per hour
Variable overhead P30.00 per unit
Fixed overhead P130,000 per period, applied at the rate of P20.00 per unit

A recent month’s transactions were:

160,000 pounds of wood were purchased at P6.50 per pound;
50,000 pounds of trim were purchased at P9.60 per pound.
155,000 pounds of wood were issued to production;
48,500 pounds of trim were issued to production.
Direct labor incurred was 31,000 hours at an average cost of P11.50 per hour.
Overhead costs were P302,000, of which P181,000 were variable.
Six thousand units were produced during the month.

7. What was the total actual cost of wood purchased?

a. P1,007,500 b. P1,024,000 c. P1,040,000 d. 480,000

8. What was the wood price variance?

a. P48,000F b. P16,000U c. P48,000U d. P16,000F

9. What was the total actual cost of trim purchased?

a. P1,488,000 b. P500,000 c. P465,600 d. P480,000
10. What was the trim price variance?
a. P5,000F b. P20,000U c. P5,000U d. P20,000F
11. What was the direct labor price variance?
a. P12,000F b. P15,500F c. P3,500F d. P19,000F

AAA Company uses the standard cost system. The following information on its direct labor costs are
provided.
Standard direct labor hours 75,000
Actual direct labor hours 72,500
Direct labor efficiency variance (favorable) P10,000
Direct labor rate variance (favorable) 14,500
Total payroll 275,500
12. What is AAA Company’s actual direct labor rate?
P0.20 b. P4.00 c. P3.60 d. P3.80

AAA Company uses a standard cost system. Information for raw materials for Product RB for the
month of October is as follows:
Standard unit price P1.60
Actual purchase price per unit P1.55
Actual quantity purchased 2,000 units
Actual quantity used 1,900 units
Standard quantity allowed for actual production 1,800 units

13. What is the material purchase price variance?

a. P90 favorable b. P90 unfavorable c. P100 favorable d. P100 unfavorable

Information on AAA Company’s direct materials costs is as follows:

Actual units of direct materials 20,000
Actual direct materials cost P40,000
Standard price per unit of direct materials P2.10
Direct material efficiency variance (favorable) P3,000

14. AAA Company’s direct material price variance was

a. P1,000 favorable b. P1,000 unfavorable c. P2,000 favorable d. P2,000 favorable

Home Company manufactures tables with vinyl tops. The standard material cost for the vinyl used per
Type-R table is P7.80 based on six square feet of vinyl at a cost of P1.30 per square foot. A production
run of 1,000 tables in January resulted in usage of 6,400 square feet of vinyl at a cost of P1.20 per
square foot, at a total cost of P7,680.

15. The usage variance resulting from the above production run was
a. P120 favorable b. P480 unfavorable c. P520 unfavorable d. P640 favorable

Justine Corporation uses a standard cost system. Direct labor information for product. Ten for the
month of June is as follows:
Standard rate P6.00 per hour
Actual rate paid P6.10 per hour
Standard hours allowed for actual production 1,500 hours
Labor efficiency variance P600 unfavorable

16. What are the actual hours worked?

a. 1,400 b. 1,402 c. 1,598 d. 1,600

17. AAA Inc. produces three products. Production and cost information is as follows:

Model Y Model O Model U

Units produced 2,000 6,000 12,000

Direct Labor hours 4,000 2,000 4,000

Number of setups 100 150 250

The consumption ratio for the number of setups would be?

AAA Company is preparing its annual profit plan. As part of its analysis of the profitability of
individual products, the controller estimates the amount of overhead that should be allocated to
the individual product lines from the information given as follows:

Wall Mirrors Specialty Windows

Units produced 25 25

Material moves per product line 5 15

Direct labor hours per unit 200 200

Budgeted materials handling cost

P50,000

18. Under a costing system that allocates overhead on the basis of direct labor hours, the
materials handling costs allocated to one unit of wall mirrors would be?
19. Under ABC, materials handling costs allocated to one unit of wall mirrors would be?
20. Selecta Corp manufactures ice creams; magnum and cornetto. The following are the information for
two products.
Setups Inspections Assembly
Magnum- 10,000 units 6 3 2
Cornetto- 40,000 units 4 6 4
Activity Pool Activity Base Budgeted Amount
Setups 400,000 1,000,000
Inspections 200,000 600,000
Assembly (DLH) 500,000 2,600,000

The total factory overhead to be changed to each unit of Magnum:

a. 38.80 c. 48.80
b. 34.40 d. 32.80

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