Republic of the Philippines

BATANGAS STATE UNIVERSITY

The National Engineering University
Pablo Borbon Campus
Rizal Avenue Ext., Batangas City, Batangas, Philippines 4200
Tel Nos.: (+63 43) 980-0385; 980-0387; 980-0392 to 94; 425-7158 to 62 loc. 1124
E-mail Address: cabeihm.pb@g.batstate-u.edu.ph | Website Address: http://www.batstate-u.edu.ph

College of Accountancy, Business, Economics and International Hospitality Management

Undergraduate Program

Quiz #1
Strategic Cost Management: Standard Costing
Second Semester, AY 2022 – 2023

Name: __________________________________________ Score: ___________

Section: _________________________________________ Date: ___________

General Directions:
1. Erasures should be avoided.
2. Answers must be complete and in correct spelling.
3. Unanswered questions will be marked wrong.

I. Multiple Choice
Directions: Read each test item carefully and select the response that best answers the
question or statement. Shade the box that corresponds to the letter of your choice
on the provided answer sheet.

For questions 1-4. Darf Company applies overhead on the basis of direct labor hours. Two direct
labor hours are required for each product unit. Planned production for the period was set at 9,000
units. Manufacturing overhead is budgeted at P135,000 for the period, of which 20% of this cost
is fixed. The 17,200 hours worked during the period resulted in production of 8,500 units.
Variable manufacturing overhead cost incurred was P108,500 and fixed manufacturing overhead
cost was P28,000. Darf Company uses a four variance method for analyzing manufacturing
overhead.

1. What is the overhead spending variance for the period?

ANSWER: P5,300 unfavorable

2. What is the variable overhead efficiency variance for the period?

ANSWER: P1,200 unfavorable

3. What is the fixed overhead budget (spending) variance for the period?

ANSWER: P1,000 unfavorable

4. What is the volume variance for the period?

ANSWER: P1,500 unfavorable

5. Hingis had a P750 unfavorable direct labor rate variance and an P800 favorable efficiency
variance. Hingis paid P7,150 for 800 hours of labor. What was the standard direct labor wage
rate?

ANSWER: P8.00

For questions 6-7. During July, a company’s direct materials costs for the production of Product
X were as follows:

Leading Innovations, Transforming Lives, Building the Nation

 Republic of the Philippines
BATANGAS STATE UNIVERSITY
The National Engineering University
Pablo Borbon Campus
Rizal Avenue Ext., Batangas City, Batangas, Philippines 4200
Tel Nos.: (+63 43) 980-0385; 980-0387; 980-0392 to 94; 425-7158 to 62 loc. 1124
E-mail Address: cabeihm.pb@g.batstate-u.edu.ph | Website Address: http://www.batstate-u.edu.ph

College of Accountancy, Business, Economics and International Hospitality Management

Undergraduate Program

Standard unit price P 12.50

Standard quantity allowed for actual production 6,300 units
Actual unit purchase price P 13.00
Quantity purchased and used for actual production 6,900 units

6. What is the total material cost variance?

ANSWER: P10,950 unfavorable

7. What is the materials usage variance?

ANSWER: P7,500 unfavorable

8. Simbad Company’s operations for the month just ended originally set up a 60,000 direct
labor hour level, with budgeted direct labor of P960,000 and budgeted variable overhead of
P240,000. The actual results revealed that direct labor incurred amounted to P1,148,000 and
that the unfavorable variable overhead variance was P40,000. Labor trouble caused an
unfavorable labor efficiency variance of P120,000, and new employees hired at higher rates
resulted in an actual average wage rate of P16.40 per hour. The total number of standard
direct labor hours allowed for the actual units produced is

ANSWER: 62,500

9. Sorsogon Company had actual overhead of P14,000 for the year. The company applied
overhead of P13,400. If the overhead budgeted for the standard hours allowed is P15,600, the
overhead controllable variance is

ANSWER: P1,600 favorable

10. 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 P12.00
Standard hours allowed for actual production 3,000 hours
Actual rate per hour P12.60
Labor efficiency variance – unfavorable P2,400

What were the actual hours worked?

ANSWER: 3,200

11. Compo Co. uses a predetermined factory overhead application rate based on direct labor cost.
For the year ended December 31, Compo’s budgeted factory overhead cost was P600,000,
based on a budgeted volume of 50,000 direct labor hours at a standard direct labor rate of P6
per hour. Actual factory overhead cost amounted to P620,000, with actual direct labor cost of
P325,000. For the year, over-applied factory overhead was
ANSWER: P30,000

For questions 12-15. Carlos Segunda Corporation produces and sells leather handbags. In the
current year, the company budgeted for the production and sale of 1,000 handbags; however, 900
handbags were actually produced and sold. Each bag has a standard requiring two yards of
material at a cost of P4.00 per yard and 1 hour of assembly time at a cost of P9.50 per hour.

Leading Innovations, Transforming Lives, Building the Nation

 Republic of the Philippines
BATANGAS STATE UNIVERSITY
The National Engineering University
Pablo Borbon Campus
Rizal Avenue Ext., Batangas City, Batangas, Philippines 4200
Tel Nos.: (+63 43) 980-0385; 980-0387; 980-0392 to 94; 425-7158 to 62 loc. 1124
E-mail Address: cabeihm.pb@g.batstate-u.edu.ph | Website Address: http://www.batstate-u.edu.ph

College of Accountancy, Business, Economics and International Hospitality Management

Undergraduate Program

Actual costs for the production of 900 bags were P7,215 for materials (1,850 yards purchased
and used @ P3.90 per yard) and P10,125 for labor (1,125 hours @ P9.00 per hour).

12. What is the direct materials price variance?

ANSWER: P185 F

13. What is the direct materials usage variance?

ANSWER: P200 U

14. What is the direct labor rate variance?

ANSWER: P562.50 F

15. What is the direct labor efficiency variance?

ANSWER: P2,137.50 U

Prepared by:

KIMBERLY CAMILLE G. MENDOZA, CPA, JD

Instructor
February 13, 2023

Leading Innovations, Transforming Lives, Building the Nation