sis Chapter 10- Standard Costing MULTIPLE CHOICE — Theory of Accounts TOA 10-1 (AICPA) A standard cost system may be used in a. Job order costing but not process costing. b. Either job order costing or process costing. ¢. Process costing but not job order costing. d. Neither process costing nor job order costing. TOA 10-2 (AICPA) Which of the following is 2 purpose of standard costing? a. Determine breakeven production level, b. Control costs, ¢. Eliminate the need for subjective decisions by management. d. Allocate cost with more accuracy. TOA 10-3 (AICPA) Which of the following is true concerning standard costs? a. — Standard costs are estimates of Costs attainable only under the most ideal conditions, but rarely Practicable, b. Standard costs are difficult to use with a process costing system. c. If properly used, standard can help motivate employees. d. _ Unfavorable variances, material in amount, should be investigated, but large favorable variances need not be investigated. TOA 10-4 (Adapted) Which one of the following is least likely to be involved in establishing standard Costs for evaluation purposes? . a. Budgetary accountants b. Industrial engineers ¢. Top management d. Quality control Personneltrol and budgeted costs cont the budget us TOA 10-5 (Adapted) used for Cetermined afte A difference betwoen standard COPE og . ts should be, 4. Can exist because st represent what costs § aly sts \dard completed standard costs expected a whereas stan rele a pete ee roots are histor wi Can exist because budgete Fs mounts. $ jineering studies. one TOA 10-6 (Adapted) sd hy 2 firm in conjunction swith : ost often us A standard costing system is m jectives. &. Management by objective Target (hurdle) rates of return. : : ¢. Participative management programs. 4. Flexible budgets TOA 10-7 (Adapted) tandards should be set to measure Controllable The best basis upon which cost si ion inefficiencies is 2 eis tec performance. 5. Normal capacity, c. Recent average historical Performance. d Engineering Standards based on attainable performance, TOA 10-8 (AICPA) osting System, how, if at all, are When Standard costs are used in a Process cx equivalent units of Production (EUP) involved Or used in the cost Teport at 9 & Equivalent units are not used, b. Equivalent Units are Computed Using a Special approach, The actual equivalent units are multiplied by the Standard cost Per unit. The standard equivalent units are multiplied by the actual cost per unit.TOA 10-9 (AICPA) ink Standard costing will produce the same income before extraordinary actual costing when standard cost variances are assigned to Work in process and finished goods inventories. ‘An income or expense account. Cost of goods sold and inventories. Cost of goods sold. b. G d. TOA 10-10 (AICPA) Differences in product costs resulting from the application of actual overhead rates rather than predetermined overhead rates could be immaterial if a. Production is not stable, b, Fixed factory overhead is a significant cost. ©. Several products are produced simultaneously. d. Overhead is composed only of variable costs. TOA 10-11 (Adapted) Under Standard Costing System, when cost of direct material or cost of direct labor will be journalized, the work in Process account will be debited at a. Actual cost b. Standard cost : ¢. Future cost d. Historical cost TOA 10-12 (Adapted) The difference between the actual amounts an il eateecr ne aot and the flexible budget amounts for a. Production volume variance, b. Flexible budget variance, © Sales volume variance. d. Standard cost Variance.TOA 10-13 (Adapted) i mount. The sales volume variance equals asa sai ae eee hecages il ant mini ti a a. A flexible budget amount mint in Bes the actual units b. Actual operating income minus HEN) ie, ice minus budget ; ¢. Actual unit price minus aE ays luced. : 4. Badgered unit price times the difference Bet. : budgeted inputs for the actual activity le’ TOA 10-14 (Adapted) An efficiency variance equals : a. A flexible budget amount minus « static budget eee eee Actual operating income minus flexible budget operating . b oe A s ¢. Actual unit price minus budgeted unit price, times the actual units produced, : d. Budgeted unit price times the di*ference between actual inputs and budgeted inputs for the actual activity leve! achieved. TOA 10-15 (AICPA) Which i ite ? ais eee 4S customarily hold responsible for an unfavorable materials @ Quality control. 5. Purchasing. c. Engineering, d. Production, TOA 10-16 (Adapted) Under a standard Responsibility of “St S¥stem, the materials ficiency vari . ; : ne f ation and industria engineer CES are the Parchasin® industria 78. a hasing and es, Sales and ingTOA 10-17 (Adapted) ion control Which of the following variances is most controllable by the production supervisor? a. Material price variance Material usage variance Variable overhead spending variance b ©. d. Fixed overhead budget variance TOA 10-18 a.. Actual price of di n 6. Actual Price of direct material is lower than the standard price ¢. Actual direct materials used in higher than the standard quantity of direct materials f d. Actual direct materials used is lower than the standard quantity of direct materials. TOA 10-19 (AICPA) An unfavorable price Variance occurs because of a. Price increases for raw materials. b. Price decreases for Taw materials, ¢. Less than anticipated levels of waste in the manufacturing process, a. More than anticipated levels of waste in the manufacturing procece TOA 10-20 (Adapted) The difference between the actual and standard pri f an ii multipliedby the actual quantity equals the eee ae a Price (rate) Variance 6. Controllable variance ¢ Spending variance d, Quantity (usage) variance$20 variance shall be ial price ter I mat TOA 10-21 (Adapted) syste, direct Standard Costs r vad ety compte 8 ar Actual iret trial? ra yin process } i : on 7 anil inet materi “onverted 10 ™ . inect materi d. Actual direct mé ‘d with the ; -d compares jals use N Operati, Tan AICPA se al cat of equied) fice mdunaget materials varianes Tint of mate! ted as tO ifitis Se oe er cioigandard amo O further vale variance if it is ite the tot is variance hb ble, why must this variance 7 is favoral Ta a noed to further eval i ul oaniy ena accounting principles req} it for analyzed in three stages. inthe annual report to equity owners All variances must appear d. Detem fatness and usage variances allows raat to evaluate . terminin, C ; a the efficiency of the purchasing and production fun a re that all variances be b c TOA 10-23 (Adapted) Price variances and efficiency variances can be key to the Performance ‘measurement within a company, In evaluating the py erformance within a Company, a materials efficiency variance can be caused by all of the following except the a. Performance of the workers using the material, 5. Actions of the Purchasing department, ¢. Design of the Product. Sales volume Of the product, TOA 10-24 Adapted) The journal entry to A Tecord the Pant itludes a debit tg direct mayo 2" Purchase of di ; 8 statements jg come 'al efficiency "ance Wg ding the ” . o ie521 10 Standard Costing Gespier ne the standard The actual direct material used in production is higher than a ei rect materials that should have been used, itis - b. The actual direct materials used in production is lower than "direct materials that should have been aed atta eet The actual purchase price of direct materials is higher ice of direct materials. : ass aadard d. The actual purchase price of direct materials is lower than price of direct materials. © TOA 10-25 (AICPA) i . indicates that A debit balance in the direct labor efficiency variance account indicates a, Standard hours exceed actual hours, b. Actual hours exceed standard hours. : c- Standard rate and standard hours exceed actual rate and actual ious d. Actual rate and actual hours exceed standard rate and standard TOA 10-26 (AICPA) a. Materials mix. b. Materials price, ¢. Labor rate. 4. Labor efficiency, TOA 10-27 (Adapted) Variable overhead is applied on the basis of standard direct labor hours. If, fora given period, the direct labor efficiency variance is unfavorable, the variable overhead efficiency variance will be a. Favorable Unfavorable c. Zero a. The same amount as the labor efficiency variance TOA 10-28 (Adapted) Under Standard Costing System, if the actual direct labor hours i er Stan i rs is more Standard direct labor hours, the Journal entry to Tecord the incurring a labor cost wil] Tesult to$22 variance a. Debit to labor efficiency b. Credit to labor rate vananr | | Gredit to labor efficiency © Debit to labor rate varian TOA 10-29 (AICPA) um will be disclosed in Excess direct labor wages resulting which type of variance? a. Yield b. Quantity ¢. Labor efficiency d. Labor rate from overtime premi TOA 10-30 (AICPA) The difference between the actual-labor rate multiplied by fe actual hours worked and the standard labor rate multiplied by the standard labor hours is the a." Total labor variance. b. Labor rate variance, ¢. Labor usage variance. d. Labor efficiency variance. TOA 10-31 (Adapted) Which of the following fac a. Spending variance Controllable Variance ¢. Efficiency Variance 4. Volume Variance tory overhead variances is Pure variable? TOA 10-32 (aicpay The fixed fac : a ity level Teneeait ication Tate ay level for g Biven period i for g Zero, ; the vo} : t equal thi: i b Favorabye “me Variance will be T!S Predetermined. Unfavorable, @_ Either favorable or unfavorable, depending on the budgeted overhead. TOA 10-33 (AICPA) Which of the following standard a production supervisor? a. Overhead volume. b. Overhead efficiency. c. Labor efficiency. d. Materials usage. costing ' variances would be least controllable by TOA 10-34 (Adapted) Which of the following factory overhead variances is pure fixed? 2 Spending variance b. Controllable variance c. Efficiency variance 4. Volume variance TOA 10-35 (AICPA) Unde. the two-variance method for analyzing factory overhead, the difference between the actual factory Overhead and the factory overhead applied to Production is the , a.. Controllable variance. b. . Net overhead variance, ¢. Efficiency variance, d. Volume variance.ous blems MULTIPLE CHOICE - Pro! hour but shouig 10 per PROB. 10-1 (Adapted) a cost of P is the proper journa} ete at _ What is ject required $0 hours to COMPIY YF our A project equired 50 hou oor 540 have taken only entry to record the costs? 100 a. Work in process _ 2 500 DL efficiency variane DL Price variance 440 Accrued payroll 60 b. Wage expenses 500 DL efficiency variance 460 ‘Accrued payroll 100 ©. Work in process 60 DL price variance DL effceney variance 500 Accrued payroll 500 4. Work in process $00 Accrued payroll PROB, 10-2 (Adapted) have applied P31,500 of fixed factory overhead if Capacity mee eae Given that 2,000 standard hours were allowed for the actual Output, that actual fixed factory overhead equaled the budgeteg amount, and that overhead was applied at a rate of PIS per hour, what is the Journal entry to Close the fixed factory overhead accounts? a. Fixed overhead contro] 30,000 Production volume Variance 1,500 Fixed overhead applied 31,500 Cost of, 800ds sold 31,500 : Fixed overhead contro] , (ork in process 31,500 Overhead price Variance 30,000 . Fixed overhead applied 1.500 Fixed overhead *Dplied 31,500 Production Vol Variance 30,000 Fixed over contro} 1,500 31,500“Chapter 10 stanaara Costing PROB, 10-3 (Adapted) , The eealn the production area. Pp on cbr oom tors. Company pai s Ps dommpany ot standard dort of jenic May, 530 hours were worked by the j is janitorial expenses a) What is the proper journal entry to record this janit worked by the janitors? 0 a. Salaries expense 2,65 2,650 aa 2,650 b. Variable overhead control z 2650 Variable overhead applied heap ©. Variable overhead control ; 650 Payroll payable Sao 4. Variable overhead applied ; Sean Payroll payable icatic ‘0 b) What is the appropriate journal entry to record the application of the 53 hours worked by the janitors? a. Work in process 2,385 ae Variable overhead applied a b. Work in process 2,385 Variable overhead control 2,385 c. Variable overhead control 265 Work in process 2,385 ' Variable overhead applied : 2,650 d. Cost of goods sold 2,385 Variable overhead applied : 2,385 PROB. 10-4 (Adapted) Process Co. uses a standard Cost system that carries materials at actual Price until they are transferred to the work in process account. In Project A, 500 units of Material X were used at a cost of P10 per unit. Standards Tequire 450 units to complete this project, The standard price. is established at P9 per unit. What is the journal entry to record direct materials issued? a. Work in Process 4,950 DM price variance 500 DM quantity variance 450 Inventory 5,0001 10 Standard Costin $26 a ee S00 7 450 b. Work in process DM price variance ste DM quantity variance aah Inventory 00 ©. Work in process ao DM price variance ; % DM quantity variance : 000 Inventory 000 2 d. Work in process 000 Inventory PROB. 10-5 (AICPA) costs for the month of January was a, Information on Cox Co.’s direct material follows: 18,000 Actual quantity purchased P 3.60 Actual unit purchase price . Materials purchase price variance - unfavorable (based on purchases) 4 P 3,600 Standard quantity allowed for actual production 16,000 Actual quantity used 15,000 For the month of Jam i : 4 ee uary, there was a favorable direct material usage variance of & 3,375 © 3,400 4 3,800 PROB, 10-6 (AICPA) Carr Co, had an is vari: unfavorable materi, i this variance should be charged be ey deparinee ae of P900. What amount t? for Purchasin, Purchasing “Warehousing oe Mecho Manufacturing a. i 0 fe 300 900 00 | 500 - 0 300 - 0 ‘iliSGheetee 10= speneers cum PROB. 10-7 (Adapted) chase. What is the journal ice variances are recorded at the time of purchase. eis By to tooo a direct materials price variance if materials are purcha: per unit for P650 and their standard price is P4 per unit? 650 a, Inventory 650 Accounts payable a b. Inventory 130 DM price variance ‘sa Accounts payable ie c. Inventory 20 Work in process He Cash d. Finished goods oa DM price variance a as PROB. 10-8 (AICPA) The standard direct material cost to produce a unit of Lem is 4 meters of material at P2.50 per meter. During May, 4,200 meters of material costing P10,080 were purchased and used to produce 1,000 units of Lem. What was the material price variance for the month of May? a. 400 favorable b. 420 favorable c. 80 unfavorable d. 480 unfavorable *ROB. 10-9 (AICPA) Perkins Co., which has a standard cost sys in its inventory at June 1, purchased in standard cost of P1.00. The following int stem, had 500 units of raw materials X May for P1.20 per unit and carried at a formation pertains to raw material X for the month of June: Actual number of units purchased 1,400 Actual number of units used , 1,500 Standard number of units allowed for actual production 1,300 Standard cost per unit P 1.00 Actual cost Per unit 1.10ee ial X for June raw materi: : iance for terials purchase price vari fe ma The unfavorabl 0 a b& 130 a 140 4d 150 PROB. 10-10 (AICPA) ‘ i facture of a is tion with the manu ‘ ing system in connection vs roduct contains 2 soe sie ain costing sys Oi of direct matorale renee calculated “one size fits al d a 20% of direct ‘Ost Of the ir ls. However, ing process. The ci yards of direct material ing the manufactur 1g ea t Per unit of dee 9p ye saa a mes, Tec irect mat finished product is a 4.80 b& 6.00 © 720 4 750 PROB, 10-11 (AICPA) Each radio Tequires three Which has a stan 'd cost of P] 45 per unit, During le following with Tespect to Part XBEZ52, Units Purchases (P18,000) 12,000 Onsumed in m; facturing 10,000 dios manufac, d 3,000 ie 1g May, Blaster, Ing Incurred a direct Materials Purchase price Variance a 50 unfavorable, 450 favorabl ¢. Vorabl d,nape 10 Standard Coming . During May, Blaster, Inc. incurred a materials efficiency variance of o 1,450 unfavorable. b. 1,450 favorable. 4,350 unfavorable. d. 4,350 favorable. PROB. 10-12 (AICPA) ChemKing uses a standard costing system in the manufacture of ee product. The 35,000 units of raw materials in inventory were ae P105,000, and two units of raw materials are required to produce one uni ct. The product. In November, the company produced 12,000 units of protic 2Pe. standard allowed for materials was P60,000, and there was an quantity variance of P2,500. a. ChemKing’s standard price for one unit of material is a. 2.00 b. 2.50 c. 3.00 d, 5.00 b. The units of materials used to produce November output totaled a. 12,500 units b. 23,000 units ¢. 24,000 units d. 25,000 units ¢. The materials price variance for the units used in November was a. 2,500 unfavorable. . b. 11,000 unfavorable, ¢. 12,500 unfavorable. d. 3,500 unfavorable. PROB. 10-13 (A. uthor) An entity recently Set-up its standard costs for its direct materials. The entity sets, j the benchmark at 3 units of direct materials per product at a standard Price of P5) Per unit of direct material, :530 materials at a total cost of units of direct "7 250 units of direct During the year, the entity acquired a art sproduels Gai 2,400. The entity also manufactur materials. 4 2 a. What is the direct material price variance" ‘a. 250 unfavorable 7 b. 300 favorable cc, 350 favorable d. 400 unfavorable b. What is the direct material usage variance? a. 150 unfavorable b. 300 unfavorable c. 250 favorable a. 350 favorable PROB. 10-14 (AICPA) Yola Co. manufactures one product with a standard direct manufacturing labor cost of 4 hours at P24.00 per hour. During June, 1,000 units were produced using 4,100 hours at P24.40 per hour. The unfavorable direct labor efficiency variance was a 2,440 b. 2,400 c 1,640 a 800 PROB. 10-15 (AICPA) Harper Co. uses a standard cost system. Data relating to direct labor for the. month of August is as follows: Direct labor efficiency variance — fa Sundar ee favorable P 5,250 cual direct labor rate a tandard hours allowed for actual production ies 9,00053. chapter 10 - Standard Costing What are the actual hours worked for the month of August? 75 a. 8,400 b. ©, 8,300 d. 8,250 PROB. 10-16 (AICPA) May was for 9,000 units with direct Dudgeted at 45 minutes per unit for a The flexible budget for the month of 8,500 units with P127,500 in materials at P15 per unit. Direct labor was total of P81,000. Actual output for the month was , direct materials and P77,775 in direct labor expense. The direct labor sundae ae 45 minutes was maintained throughout the ‘month, Variance analysis ©! performance for the month of May would show a (an) 7,500 favorable materials usage variance. a. b. 1,275 favorable direct labor efficiency variance. c. 7,500 unfavorable material usage variance. d. 1,275 unfavorable direct labor price variance. PROB. 10-17 (RPCPA) Information on San Edilberto Co.’s direct labor costs for the month of August is as follows: Actual rate P. 7.50 Standard hours 11,000 Actual hours 10,000 Direct labor price variance - unfavorable P 5,000 What was the standard rate for August? a. 8.00 b. 6.95 c 8.05 d 7.00PROB. 10-18 (AICPA) facturing following direct manu! maeeced of product Glu: ; direct workers : 30 Time equied to make one unit 0 er Nenber of productive hours per week, Per work' ps wages per worker labor 20% of wages workers penefits treated as direct manufacturing costs What is the standard direct manufacturing labor cost labor information pertains tthe per unit of product Glu? PROB. 10-19 (AICPA) The following information pertains to Bates Co.'s direct labor for March: Standard direct labor hours 21,000 Actual direct labor hours 20,000 Favorable direct labor rate variance P8,400 Standard direct labor rate per hour 6.30 What was Bate’s total actual direct labor cost for March? a. 117,600 b. 118,000 c. 134,000 d. 134,400 PROB. 10-20 An entity recently set-up its standa its di i ae Se Pe rd costs for its direct labor. The entity sets the direct labor hour. Durin, ‘abor hours per product at a standard rate of P100 per F ig the year, the entity manuf: 0 direct labor hours at total direct labor costs of Pai 10 products using 30333 cnapee 10 = Standard Conting ‘What is the direct labor rate variance? a. 600 favorable b. 400 unfavorable c. 200 favorable 800 unfavorable 400 favorable 1,000 unfavorable 600 unfavorable a. b. What is the direct labor efficiency variance? a. b. & d. 200 favorable PROB. 10-21 (AICPA) The following information pertains to Roe Co.'s manufacturing operations: Standard direct manufacturing labor hours per unit Po Actual direct manufacturing labor hours 10, Number of units produced i 5,000 Standard variable overhead per standard direct manufacturing labor hour P 3.00 Actual variable overhead P 82,000 Roe’s unfavorable variable overhead efficiency variance was a. 0 b. 1,500 c. 2.000 d. 3,500 PROB. 10-22 (AICPA) John Player Corp. employs a standard absorption system for product costing. The standard vost of its product is as follows: Direct materials P 14.50 Direct labor (2 direct labor hours @ P8) 16.00 Manufacturing overhead (2 direct labor hours @Pll) 22.00 Total standard cost P_ 52.50Chapler Jo~ seaman sweatin, S34 gS as ee | ivity level of 600,000 Co a rican arti td d rate is based 4pe00 units each month is rhea luce 25, has The manufacturing overhead Pte overhead is direct labor hoi i manus P 3,600,000 ee 3,000,000 Variable P-6,600,000 Fixed Total i bor hours in it d 53,500 direct lal oounits, Pens ead for the month was Daring October, 1? produced 26,000 manufacturing over ea fee aeeeh e October at a cost of Tea variable. What’ is the 250,000 fixed an , : eee variance for October? a. 10,000 unfavorable b. 3,000 unfavorable c 9,000 unfavorable d. 10,000 favorable PROB. 10-23 (AICPA) Jordan Co. manufactures Product X with the following standard Costs of direct materials and direct labor: Direct materials, 20 yards @ P13.50 Per yard P 270.00 Direct labor, 4 hours @ P90,00 Per hour 360.00 The following information Pertains to the month Of May: Direct materials Purchased, 18,009 yards @ P13. 89 Peryard p 248,400 Direct labor, 2,100 hours @ P91.50 Per hour ; 192,150 Direct materials used, 9,500 Yards ction during May ; 500 units What is the direct Material price Vari: ' a San Senate ‘ance (based on Purchases)? b& S400 unfavorable & 61750 fevorabie 4° 6,750 Unfavorable332 Chapter 10 Standard Costing. b What is the material usage variance? 5,400 favorable b 5,400 unfavorable e. 6,750 favorable d. 6,750 unfavorable What is the direct labor rate variance? 3,150 favorable 9,000 favorable 3,150 unfavorable 9,000 unfavorable a. b. d. What is the direct labor efficiency variance? 3,150 favorable 9,000 favorable 3,150 unfavorable 9,000 unfavorable a b. c. d. PROB. 10-24 (AICPA) ‘A manufacturing firm planned to manufacture and sell 100,000 units of product f P4,00 and a fixed cost per unit of during the year at a variable cost per unit o 2.00. The firm fell short of its goal and-only manufactured 80,000 units at a total incurred cost of P515,000. The firm’s manufacturing cost variance was a. 85,000 favorable. b. 35,000 unfavorable. c. 5,000 favorable. d. 5,000 unfavorable. PROB. 10-25 (RPCPA) The U.R. Good Co. produces a product using standard costs as follows: 1. Standard cost per unit . ae : 7 kilos at P3.50 per kilo i bor : 8 hours at P1.75 per kilo vethead: Fixed P1.15 per hour or P9.20 per unit Variable PO.85 per hour or P6.80 per unitthe following: determine From the given informat ‘ fateria variance is een 40.00 favorable ic 6. 2,800.00 unfavorab! © 240,00 unfavorable 4 360.00 favorable . Labor rate variance is 4 400.00 favorable b. 315.00 unfavorable © 175.00 favorable d 500.00 unfavorable Total material Variance is 2 2,800.00 favorable 6. 2,800.00 unfavorable ¢. 3,000.00 unfavorable 4d 3,040.00 favorable d. Material quantity variance is a4 200.00 favorable 250.00 unfavorable ©. 240.00 favorable 4. 2,800.00 favorable PROB. 10-26 (AICPA) AB Manuf; “ 6.300 13,209 P3.45 per P80 per ki, 4.800 kilos337 Chapter 10~ Standard Costing .00 and for 30,000 units. The estimated sales price per unit for Product A io aes mn ae Product B was P8.00. The actual demand for Product A was 8.0 nt 20 Product B was 33,000 units, The actual price per unit for Product A it bo and for Product B was P7.70, What amount would be the tot variance for AB Manufacturing Corp? a. P3,700 unfavorable b. 8,300 unfavorable c. P3,700 favorable d. P14,100 favorable PROB. 10-27 (AICPA) Union Co. uses a standard cost accounting system, The following factory overhead and production data are available for May: Standard fixed overhead rate per direct labor hour P 1,00 Standard variable overhead rate per direct labor hour P_. 4.00 Budgeted monthly direct labor hours 40,000 Actual direct labor hours worked 39,500 Standard direct labor hours allowed for actual production 39,000 Overall overhead variance - favorable P 2,000 What is the applied factory overhéad for May? a. 195,000 b. 197,000 c. 197,500 d. 199,500