STANDARD COSTING

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

What is the materials purchase variance?

P90 favorable P90 unfavorable
P100 favorable P100 unfavorable

Nice, Inc. uses a standard cost system. Overhead cost information for Product A for the month
of May is as follows:
Total actual overhead incurred P12,600
Fixed overhead budgeted P 3,300
Total standard overhead rate per direct labor P 4.00
Variable overhead rate per direct labor hour P 3.00
Standard hours allocated for actual production 3,500

What is the overall (or net) overhead variance?

P1,400 favorable P1,200 favorable
P1,200 unfavorable P1,400 unfavorable

Egay Corporation uses a standard cost system. Direct labor information for Product E for the
month of October is as follows:
Standard unit price P6.10 per hour
Actual rate paid P6.00 per hour
Standard quantity allowed for actual production 1,500 hours
Labor efficiency variance P600 favorable

What is the actual hours worked?

1,600 1,598
1,402 1,400

Edil company’s budgeted fixed factory overhead cost is P50,000 per month plus a variable
factory overhead rate of P4 per direct labor hour. The standard direct labor hours allowed for
October production was 18,000. An analysis of the factory overhead indicates that in October,
Edil had an unfavorable budget (controllable) variance of P1,000 and a favorable volume
variance of P500. Edil uses two-way analysis of overhead variance.

The actual factory overhead measured in October is:

P121,000 P122,000
P123,000 P122,300
The applied factory overhead in October is:
P122,500 P123,000
P122,000 P121,000

The data below relate to the month of April for Tim, Inc. which uses a standard cost system:
Actual direct labor cost P43,400
Actual hours used 14,000
Standard hours allowed for good output 15,000
Direct labor rate variance-debit 1,400
Actual total overhead 32,000
Budgeted fixed cost 9,000
Normal activity in hours 12,000

Total application rate per standard direct-labor hour 2.25

Tim uses a two-way analysis of overhead variance (controllable and volume)

What was Tim’s direct labor usage (efficiency) variance for April?
P3,000 favorable P3,200 unfavorable
P3,200 favorable P3,000 unfavorable

What was Tim’s budget (controllable) variance for April?

P2,250 unfavorable P500 favorable
P2,250 favorable P500 unfavorable

What was Tim’s volume variance for April?

P500 unfavorable P500 favorable
P2,250 unfavorable P2,250 favorable

Roy Corporation’s direct-labor costs for the month of March were as follows:
Standard direct-labor hours 42,000
Actual direct-labor hours 40,000
Direct-labor rate variance, favorable P8,400
Standard direct-labor rate per hour P6.50

What was Roy’s direct-labor payroll for the month of March?

P251,600 P244,000
P260,000 P243,000

Information on Aicel Company’s direct-material costs is as follows:

Actual units of direct material used 20,000
Actual direct-material costs 40,000
Standard price per unit of direct-materials P2.10
Direct material efficiency variance, favorable 3,000

What was Aicel’s direct-material price variance?

P1,000 favorable P2,000 unfavorable
P2,000 favorable P1,000 unfavorable
Which one of the following terms best describes the rate of output which qualified workers can
achieve as an average over the working day or shift, without overexertion, provided they adhere
to the specified method of working and are well motivated in their work?
Standard hours Standard performance
Standard time Standard unit

Standard costs are used for all the following except:

Controlling costs Forming a basis for price setting
Measuring efficiencies Income determination

The type of standard that is intended to represent challenging yet attainable result is:
*Controllable cost standard
*Normal standard
*Flexible budget standard
*Expected actual standard
*Theoretical standard

Which of the following is true concerning standard costs?

*Standard costs are estimates of costs attainable only under the most ideal conditions, but
rarely practicable
*If properly used, standards can help motivate employees
*Standard costs are difficult to use with a process-costing system
*Unfavorable variances, when material in amount, should be investigated, but large variance
need not be investigated

A manager prepared the following table by which to analyze labor costs for the month:
Actual hours at actual rate P10,000
Actual hours at standard rate P9,800
Standard hours at standard rate P8,820

Which variance was P980?

Labor rate variance Labor efficiency variance
Volume variance Labor spending variance