Quiz 8

1. If company follows the practice of isolating variance at the earliest point in time, what would
be the appropriate time to isolate and recognize a direct material price variance?
a. When material is issued to the requesting department or division
b. When material is purchased
c. When material is used in production
d. When purchase order is originated

2. Fly Company uses a standard cost system. The standard for each finished unit of product
allows for 3 pounds of plastic at P 0.72 per pound. During December, Fly bought 4,500 pounds
of plastic at P 0.75 per pound, and used 4,100 pounds in the production of 1,300 finished
units of product
What is the materials price variance for December? (Hint: Computer material purchase price
variance)

a. P 123 favorable c. P135 favorable

b. P 123 unfavorable d. P 135 unfavorable

3. Information on Beatle Company’s direct materials cost is as follows:

Actual units of direct materials used 20,000
Actual direct materials costs 40,000
Standard price per unit of direct materials P 2.10
Direct materials quantity variance, favorable P 3,000
What was Beatle’s materials price variance?

a. P 1,000 favorable c. P 2,000 favorable

b. P 1,000 unfavorable d. P 2,000 unfavorable

4. Information on Termites Company’s direct-materials costs is as follows:

Standard unit price P 3.60
Actual quantity purchased 1,600
Standard quantity allowed for actual production 1,450
Materials purchase price variance, favorable P 240
What was the actual purchase price per unit, rounded to the nearest centavo?

a. P 3.06 c. P 3.45
b. P 3.11 d. P3.75