ton physically ond om an accounting 8. (d cee usualy simian nate duct of o manufacturing process. Sep ccna ee Vou hon S00. ANG Ot, crop of view. SOP nave a: er dea greta ete Meet pe nomen 500 96 dite “coational processing i a esac hen fey ore constered os DY-PrOGUC! Og Sie cn nee hea ches iirmemt mestoenror ente tee, Products have minor soles volves compared with the major product(s). \__-‘Anower (a) and {0} are incorect becouse neither provides @ basis defining joint/by- SS Se a a peo ig ‘aie ove © posible olocation bose for join! Coss, it does not define the joint/by- —= Chapter 21 Standard Costing ‘employ o cost accounting system that rec manviactutng related tal costs (actual or normal cosing system) or standard cost stondord ‘expected. manana tenance cxsocm erate sarang onatons ees eee om I a rea ane, I Camar + eecton 9 Mos Ena RY teen 104sAn untavorat Shrinkoge, or nel Poss SUeeMY Yoonce ‘Worker might need futher tere’ P80 ed neo a + Reepbietany ~ce 0 vena, my wher he onto the rec! motes she eng SAP oot Jquinal Enties for Dect Materias ecer it mponioe, 1. Materials, ore recorded of Standard ice: 9. To fecord purchase of moterios: Materials at stondord price . ‘Accounts poyable, ot Scalise ‘Materials Purchase Price varlonce-iav. = 1b. To record the issuance of material to production: = Wart Proces, of nda cost ‘Materials Quanitly Veronce - uniavercbie Stee Mateos, of onda pce “Accounts payable, ot Ocival price ——— = * x we /.- Direct Labor drect materia vosonce wich abo aise 2 The direct labor wortance Is sor 10 he rte (price vatonce onde Te Sel ec argo ounce meme saree ene uti masons sonore ttn: TacStar pesca ‘outside: opmiroct. Hence WE lane onc rou Be- of the workers. It, sins to'ne tice of novinrzed werk Books WIE SEE resulting Hom materiols shortages Ine depariment oF cos! center in + Rerponanay = val ne superset mabe for ine dvecl labor elficlency sien the wor savor vononce be transfered to work-in-process ot their actual quintities oterials qvantiy ond direc! labor efficiency variances ‘when goods axe transfered trom work-inprocess 10 finished Price varionce moy be isolated a! the lime of transfer 1o worksn- that itlon o ne 1 cestode for conker ny 0” Ie recogrition of veriances. Srey al he predelemines connie © FSC! Mallras ond dectlober variances in mis eG wih octuat costs. However, because are ich ore variable os well as the the 3 Ve{SSIor ovemead variance is comprised e ‘empecled andor es than the number of dec! towed: Mat oF es "upervier Con cane ese aan fe assess moe tence Conta war Yolumeravionce, This valance mig cco he tnd prion $REs0 nh nt wpe eho ae the perio .Thxee-Way Variance. Under his melhod he foto ovethecdwatorce i 7 comprised.of three components, however there ore Iwo variations: Sending Vatonce. Ke Capac Vale, cnc Vacs 2 Spenang Vatonce: vrei Noaees ca see Pax ity Vorionce: Pox Ite Copeciy on Achat von Pm ess Actual Hous 3 Standards Role Pasx Efficiency Vartance: — ea UO! Hout x $landotd RONG meen {S3sStondord Factory Ovemead & 2 =U Net Overhead or Overall Overhead Variance: ' BE Tia ot Bodo nena — Vora enn — . = Veriable Etficlency Varionce: eo : MSMR eR ne Less one iced as Budgeted wm VOHIODIe nneree rr0op oul Company hag budgeted 0000 oh 4 ipl 1, rook fea ata total maleic cont tral ot Spot product requend TEES vaonce ond UO ezun The drect matenal pice Rice usoge = toe per Pie unfavorable: 10,000! favorable p Lat favorable 10,500 unfavorable c.__P5,000 unfavorable 10,500 favorable 0 4,500 unfavorable (aicra) 2, infomation on Rex Co.'s dect material costs for May is follows: (Alcra) 3. Perkins Company, whic matenalXntsieoniegn ae td cost system, aid 500 units of r. Cated ato sandard cost of BLP tee eae MY for P1.20 per unit and Faw mail ore i 2 The folowing information pertains to (AICPA) 5. Buckler Company: aca) ‘Manufactures, ag Cost for the vinyl used} ests with Sosy tor the vised perModelSdexs Pato baedor re et March resuttedin er sare foot. A on I2squcre feet of sage oF San eA Production run of 1.000 des Square fool loll cont ot Paes a oc on A PZ per ‘above production run was usage vorion per @. PT.200 unfavorable b. "11350 unfavorable Sa rontte (wicra) 6. Accompany uses a standard cost sytem fo account forits only product. The materials standord per unit was 4 Ibs. ct P5.10 per Ib. April were as follows: per lb. Operating data for Material US00 annem 7800 bs. Cost of materi ised ee P0950 Number of finshed units produced 2000 * The material usage variance for Apr was: : worable P1170 unfavorable a. fee & 1.200 unfavorable b> 1,050 favorable 7. Information on Kennedy Company's Grect material cass iso: flows 360 Standard unit PACE nm ‘Actual quantity purchased tual ayer ay allowed for aclual proce ee urchose price variance - favorable ...Chapter 21 lg emis pete Curd! St The average point of spo, a [Bb ae et unit, rounded to the nearest cost of the spoiled kits wor °° 2/3.compe tol purchase price Pet (0s; On Dont he what wos the actual Ps otal stondond me g. P21,000 7306 c Pas 6. 27,000 © Pesan Ball ae (AICPA) * 8100 z Fa {Adopted ftacture of its single 11. What type of drect mate variance, 8. chamking vies slot te wortory were purchased for actual number of pounds of mates 8 300 ae he product. The 35,00 ur . oduce i allowed but actual cos £xc28¢ sondarg Pasian. cre td ine ee ny e reduced 12000 unis ot *!wes es hon senda a t. In A ee stoned ‘allowed for material was P60,000, and there was an Usage Price unfavorable quantity variance of P2.500, a. Unfavorable Favorable = ; b. Favorable Fovoroble Compute for Chemking's (I) standard price fof one unit of material, ond © Fovoabie me {2} the units of material used fo produce November output: di. Unfavorable gnevemile a. (1) P3.00; (2) 24,000 units . (1) P2.50; (2) 23,000 units (CPA) tb. (11P250; 2) 25.000units d. (1) P5.00; (2) 25.000 units ek (CMA) 12. An unfavorable price variance occus becouse of 9. Yamaha Instruments established a standard cost for raw materials at P25 a. Price increases on raw materia. erunit. During the periodust ended, a total of 10,000 units were purchased b. Price decreases on raw materia. Ofc SOR wos. P2470 each, 27% was at P2490 each, and the balance: ¢. Less than anticipated levels of woste in the manutactring was oi e0ch. The raw-materials cost variance is a favorat see process. 2 Unfavorable} ree | d. More thon anticipated levels 6f wosie'in he manuioctuing a. Pl00 cc Pitoo) process. ween b. 900 900} | ‘clang vriances atthe ears! ime. (Adapted) 13. Ita Company folows a procice ofscing wm rond recognize o 10. Black Company manutactures only férspeci ‘what would bethe appropiate fi a ossytem, During one large order or oe oes Ondtuses a stancoxd material price variance? The nomal spoilage & 10% ot in ee wwalnumber of kts were spoiled, s ted. The point ion i through processi ' int Of fist inspection is 1/3 thet ocessha: the seconds he end of piece 2 through processing, and | b. When maieticlispuchased. tien ; | ‘ fas sed n roaucon 8d deborment. Relevant data Totow:” ”° omMuOUs operationin c-_ When mole ee areca wera Kits started = 1,000 chargeable lo which depariment? (Cele intocuced at the be, 4. Materials usage vriances 76 namm SooversOn Coss forthe job’ terial t Es aNd materials cost per kif ion. Pe (ca) fonderd conversion cost per a. Production. L eee, b, Purchasing.xely cause on unfavorable materials meet specifications 0 i o. Materials that tained property. 2 mochinr ol Rosnst euralo those equedby the stondordks Labor that possesses ir ertime. Scheduling of substantial ov a produced 3,000 units of is single prodyct, Teragram, las to a te peomptld for one unit of Teragram lode sx pounds of material at P30 per pound, Actual production in November wos 3,100 units of Teragrom, The accountant computed ¢ favorable materials purchose price varionce.of P380 ond an unfavorable materils quantity variance of P120, Based on these variances, one could conclude that ©. More materials were purchased that were Used. b. More materia were used than were purchased, “The actual cost of materials was less thon the standard cost, 4. The actual usage of materials was ess than the standard allowed, (CMa) Ferree” Baber Company's dretlaborcostsforthe month of January is 05 follows: \What is Barber's rect labor rate vance? ©. P17.250 unfavorable nfavorable ° ©. P21,000 unte 20700 unfavorable 4. 21,000 favorable (AICPA) 18. tion, /'s dire 'Company’ ‘Sct labor Costs forthe month of January were as follows: hat was Lion’ wi S ditect labo, *ticiency Votong 1057 8 S Px0 tg ve 6650 toate Ct labor standard or, Wea) Drocicing aunt, : tn eeeten Wes 1 et oa The rect lobar elciencyatence wy 200 cee pein ©. P1000 faverate c P2000 b 1000 unfovertie 728 nani (Ca) Acompany’s direct Standard direct labor hous per unit of product. Number of finished units produced... tooo Standard rate per direct labor hour Po ‘Actual direct labor costs incured P0300 Actual rate per direct labor hour... og The direct labor efficiency variance for October wos a. P 2,500 favorable P3500 unfavorable b. 11,500 favorable 4.800 wort od just ended for Apex « Operational statistics generated for the period just e > follow: ‘Manufacturing Co., maker of a ine of funite,c. P4000 favorable d. 40,000 unfavorable Adapteg) 15 drect labor costs is as follows: #8 Company's : sion on Westco} favorable unfavorable zn, foal st were the actual hours worked, rounded to nearest hour? wnat . 11,200 oth gd. 11914 1.120 : (AICPA) standord cos! system. The following information pertai Ss recta product B for the month of October; ins to standard hours alowed for actual production 2.000 Aclval rate paid per hour Pad Stondard rate per hour P 800 Labor efficiency variance P1,600 U ‘What were the actual hours worked? o. 1,800 ©. 2190 b. 1210 a. 2300 : (AICPA) 2%, Tap Co'secac fr Ap dscosed the folowing dating fo : Actual cost Rate vari ,000 Eiconer et 000 favorable Standard cos 1,500 unfavorable, Ach P_9,500 Wal direct labor ty £7500 rect labor tate perhout a mee Qmounted to 2.000. Thorp's standard ‘a. PS50 A 500, Sars 450 (alcral 25. 8 . Blot, Inc. estimated the costofa Information on Townsend Wany's Standard direct dec Actual direct ee Tole is oo Whol Townend aor sae, = Pe fer a. P1600 ‘May? b. 117.400 5 Moan ila iwc Gitect materials, P4¥5 000; rect cen geo CCC. cso 5 800 ec overhead, P24 per drectlaborhar. Aan materi have been sed ot Pate ease comes 2 hours at P90 per hour and, the vale orthead amounied eis ae The total variance forthe project as athe endo he month wax re © PRADO fovorabie .P7,500 unfavorable. b. 8,400 unfavorable © 9300 fovorabie cooled) - Goodman Company's direct labor costs: Standard cect obe is a zm Actual drect a ae Direct labor usage lefciencyvarorce-tovorbe. F 4000 Direct abot rate varionce-fcrcbe —-—— S80 Total nytt ernnnnneemnnnnnrnnenc ‘Compute the: (1) stondord drectiderrtecrd 2 octal ect oberrfe: ce () P84 ()?380 is (1) Pao: (2) P30 ae finaly st UP i tne monn err 9000 2 Siver Company's operations 1 poses on fee evel with| £60,000 direct labor hout impor he nr budgeted varie overead OTE qo ond al es on “4 eat bor incurred OmOUNIS . p4p,000. Lobo" vonble ‘overhead variance a1060 Ren iiency variance of P120.000. and new employees din an actual average wage rate which warn, tie idherby jord average woge rate per hour. The total n Feo OG crect labo: hours lowed for the actual units Produced ig 8 of co. 52.500 c. 62,500 b. 60000 d. 70,000 (Acopteg) laborrat pethour but an unexpectedlabor sherlagenecesticted thehinge, fo) aid workers for some jobs and had resultedin arate varionne es 9 igher actual direct labor rate was: 1800. The ©. P2720 per hour ©. P3025 perhour b. 2880 per hour ¢. 31.40 perhour (Adapted) 30. Toimprove productivity, St. Michael: | Corporation instituted a bor vhere employees are paid 75% of the time saved when production omen . somput on the basis of four-week periods. The standard production sectors oes Weekly Production (Units)* Weebly Production (Units) __ Employee Ist 2nd 3rd Total ‘ALAN 107 JOEL 14, ROMY 108 TONY 123, The emplayee who had inconsistent performance (sometimes performing ‘below standard) but got a bonus is: Q. Alan = P36 bonus ¢. Romy =P126 bonus b. Joel = P54 bonus d. Tony =P252 bonus (Adopted) id P11.25 per piece witha min Production records fora wes week show Theronnee¥o08 ofPersconeccee Worker Units Produced » 9 uy 2 82 75 emoz>r ‘What portion of the factory payrot Se ercrenwodt tory forthe week should propery be charged a. P7500 c b. 14250 a (Adapted \ 32, How's a labor rate variance computed: @. The diiference between standard andactudtrate fmes slandardhous. b. The difference between standard and actualhous fmes aciudlrate. _Thedifference between standard ond actualrate fmes actual hous. d. The difference between standard ond actual hours times the | difference between standard ond actual ate. flaca 33. Excess direct labor wages resulting om overtime prerrium wil be disclosed | in which type of variance? a. Yield c. Loboretficiency b. -Quontity d. Labor rate ace 34. An unfavorable labor efficiency variance means that , rte. . The actual labor rate was higher than the standard labor . The fotal lobor variance must aso be unfavorable. wale tr ©. Kelval labor hour worked exceeded standard labor the production level ochieved. d. Overtime labor was used during the period. (wicPA)————_——_ hapten 2p a __— pirpotonce in he labor efficiency variance indicates that as, Ade! ndord hours exceed actual hours GB A8Csihous exceedstondord hours 2 Sender ond stancardhous exceed actual ate andactyey hours. @._ Actalrate andactuaihous excéedstandardrate and standa (aicray uring he ast months. manuloctwerincuted.on unfavorable labor etic 36 Po: wsch othe fesowing the least By Coxse ol Ins walonceg oY 2. Substandard materials were purchased at @ discount"ot.g Labor eficlency nice the work force, those with thé highes, es perpetrate steed 6. 302 more per hour than expected. , (1a) 37. When a change in the manufacturing process reduces the number of direct labor hour and standards are unchanged, the resulting variance will be @. A favorable labor usage variance. b. _Anunfavorable labor usage variance, €Anunfavorabie labor rate variance. dA favorable labor rate variance. 0. P275 b. 300 (cw) (Adapted) 38. Which of the following is the most probable reason a company would ‘experience an unfavorable labor rate variance and a. favorable labor efficiency variance? a. The mix of workers assigned fo the particular job was heavily Normally uses 40,000 direct labor hours for manufacturing 120,000 product. Three units are producedin one hour, and the direct labor '15 per hour. Atnarmal capacity of 40.000 hous, the factory overhead is estimated as follows: ‘ Fxed overhead Variable overhe Total overhead b. The mix of workers a: a weighted toward the use of new, relatively low paid unskilled workers. ©. Because of the production schedule, workers from other Production areas were assigned to assist in this particular process. d. Defective materials caused more labor to be used in order 10 produce a standard unit; = (AICPA) 30,000 direct labor hours are used. total factory overhead costs would mount to: ©. P165,000 c. P195,000 b. 190,000 _ d.. 220,000 (Adopte$$ ete 3 essing services, and relevant wn below: 1084 _—— Jonco, Inc. provides COmPU! at fim’s management ase © Ooy he io, of pages per hour, 20. NS St Pours per month, 500, Voriable costs per hour, P30. Faxed costs per month, P10,000. for the month of May, 2011 12,000 pages are generated in 450 h Gclual variable costs totalled P13,200, while the actual fixed costs ou: The fhe estimated amount. The total standard cost for May was. CwUaled a. 25,000 <. P30,000 b. 27,500 d. 31,500 (Adapted) 44, The following direct manufacturing labor information i manutacture of product Glu: pases the Time required to make one unit Number of direct workers. Se eter - "Number of productive hours per week, per worker 4 ’ Weekly wages per worker z 500 Workers’ benefits treated as direct manufacturing labor costs... 20% of wages What is the standard direct manutactuing labor cost per unit of product Glu? a. P30 c. PIS bm Cie (aicra) 45, -In connection with a standard cost system being developed by Fiint.Co. the following information is being considered with regard to standard hours Gilowed for output of one unit of product: Hours ‘Average historical performance for the past 3 years 185 Production level to sai dem eee 140 based on attainable performance 1.50 Engineering estimates based on ideal performance wri 1-25 ‘Costing systemin connection with the manylacture ing. Each unit (aca 1. The following were among Gage Co.'s 201! costs: lage. ssnsonie P $000 renee YOO0 standard cost 20,000 Standard manufacturing cé secon 100,000 ‘Actual prime manufacturing c: 80.000 Gage’s 2011 actual manufacturing overhead was: a. 40,000 ©. P 55,000 b. 45) 3. 120,000 ae (ACPA) 48. Cop Processing applied factory overhead based on machine hours at the er machine hour. Mixing. P7.75; Washing, P15.10; ond. ing, P2.125.In 201 1, actual machine hours are 19,000, 27,500, and 5.500 pectively, for Mixing, Washing, and Packing deporiments. If the actual factory overhead incurred is P574,375, he amount of over-appiied (under oppiied) overhead is 9. P (187.50) c. P 2356250 b. 11,875.00 d. (76,125.00) (Adapted)0. al = ——Lhapuer 21 standard cost system. Overhead: cost information for ne month of October is as follows: otal actual overhead incured Fixed overhead BUdgEED «wan Total standard overhead rate per Voriable overhead rate per DLM..... Stondard hous allowed for actual production. What is the overall or net ovethead variance? 9. P1,200 favorable ¢.P1.400 favorable b. 1,200 unfavorable d. 1400 unfavorable (AICPA) Peters Company uses a flexible budget system ond prepared the following information for the year eo - P 650 P 600 Peters operated at 80% of capacity during the year, but applied factory ‘overhead based on the 90% capacity level. Assuming that actual factory @verhead was equal to the budgeted amiount for the attained capacity, what is the amount of overhead variance for the yeor? 2. P6000 overabsorbed P1200 overabsorbed b. 6000 underabsorbed ©=—=d._——12000 underaibsorbedt (AICPA) Dickey Company had total underappied overhead of P15,000. Addiional dat: Variable Overhead: ~~" Applied basedton standard DLH allowe .- 42000 Budgeted bosed on standard DIK... “38,000 Fxed Qverheag: ‘Applied based on standard DLH alowed 30000 Budgeted based on standard DM... "27,000 ~—_____ ts CcIval total overheage = 0. 50,000 , Peon b. 57,000 6 e700 (aicea formation presented bel ng variance, ‘Ow, coicuiate the total overhead ‘Actual ditect labor hours (DLs) Units produced et a. PS00 unfavorable c 1,000 untavorabie b. 800 unfavorable a 1300 unfavorable low 53. Union Company uses a standard cost accounting system. The following overhead costs and production datc are avaiable for August Standord fixed Poy Poo 40.000 39.500 39/000 ‘Overall overhead variance favorable 2000 The applied factary ovethead for August should be a. 195,000 we. Pug7.so0 199: b. 197,000 4. wicen)54, Alden Company has jard absorption and flexible bud, ‘ond uses a two-way analysis of overhead. variances. Selected ain® S¥stem February production activily are: 1G10 for the Budgeted fixed factory overhead Actual factory overhead incured F 64.000 Voriable factory overhead rate p F230,000 Standard DUH Ces: Actual DLH.. $2000 32.000 The budget (controllable) variance for February is ©. P1000 favorable ©. P6000 favora b. 1,000 unfavorable d. 6000 interes : (aicray 2. 1,900 untavorable ©. P1,900 favorable b. 700 favorable d. 700 unfavorable (CMa) ._ Information on Ripley Company's overhead costs for the January production ‘activity is as follows: Budgeted fixed overhead ... Standard fixed overhead rat. Standard variable overhead rate per DI Standard DLH allowed for actual prod Actual total overhead incumted new: Ripley has a standard absorption and flexible budgeting systerh, and uses ‘the two-voriance method (hwo-way analysis) for overhead variances. The volume (denominator) variance for January is 2. P3000 unfavorable c. P4000 unfavorable b. 3000 favorable 8. 4000 favorable oy opescoting 57. Using the following intormation, Compute the: (1) variable overh ovetnead spending variance, "7 iclency variance, ond 2) variable @. (1) P400 fav. (2) Plod tay. «. v. (1) Pa00 unto; b. (1) P400 fov.; (2) P100 untav. a. ti PadDurtoy te} PIoo ney, (cw) 58; ert Company applies overhdad on the basis of direct labor h Manufacturing overhead is budgeted at P135,000 for the period, of which 29% of this costs fixed. Two direct labor hours are required for each product unit. Plonned Production for the period was set at 9,000 units. The 17.200 hours worked during the period resulted in production of 500 unis Variable manufacturing overhead cost incurred was P108,500 and fixed manufacturing overhead cost was 28,000. Dert Company uses a four variance method for analyzing manutacturing overhead. ‘Compute the: (1) variable overhead spending variance, and {2} voriable ‘overhead efficiency variance: . (1) P5,300 unfav.: 'b. (1) P5,300 untav.: Using the same information in No. 58, compute the: (1) fixed overhead budget (spending) variance, and (2) fixed overhead volume variance: 000 uni: P1,500 unt. ¢, 000 unt; P1,S00 fov. 000 fav.; PI.SO0 fav. d. ‘Simson Company's master budget shows straighHine depreciation on foctory equipment of P258,000. The master budge! wos prepared at an; ‘annual production volume of ‘of product. This production volume is expected to occur ur throughout the year. During _ September. Simson produced 8,1 of product, and the accounts‘I ith a flexible budge! ‘Sn factory machinery for September would be c. 20,500 a. 21,500 (CMA) oyamat Co. at normal capacity, operates at 600,000 labor hours with Sertorc iobor rate of P20 per hour. Variable factory overhead is applied at Mharate of P12 per labor hour. Four units should be completed in on hour, Lost year, 1,360,000 units were produced using 300,000 labor hours. Alllabbor hours were paid at the standard rate, and actual overhead cost consisted, (of P3,738,000 for variable items and P3,000,000 fixed items. The total labor and overhead costs saved, by producing at more than standard, amounted to: * o> 450,000

rot Weekly wages per worker... P00 ‘Add Benefits reated os OL Je Total Direct Labor Cost per 4 Divided by: No. of hours per 2 Direct Lobex Cost per hour BIS Muted by: no, a B.20(a) 45." (b) Stondord costs s he scentiicaly predetermined cost of manulaajuring @ single unit (0 specific quanty of product during a specific period. * Ineoreticol or lea! standards i 0 stondor set for an ideal or maximum feve} of activity 0 el als 19 be olmed far rather than [Noma standard is 0 standard set for a nomal level activity ond etficiency, intended fo represent ghalenging yet offoinoble resus, Therefore, engineering estates bated on offainabie performance would provide the best boss for Fir in establshing stondord hours allowed. ‘equal fo the cost per yord.. Each finshed unit 1m states that the 20% direct materio! rect materia inputstandard Direct Materials Cost per unit. £ 1p. ctual factory overhead would be computed as fofows: : ‘of at an overhead. Freigh-out is ignored fo determine actual ovemead becouse they are considered as seling expense. Thus, Totol Actual Factory Costs Less: Actual Prime (3,500 x P4) -P12,600 = P1,400 Favorable (c) The vance é fovoroble because octual overhead ingured was less shan standard Sevier 50. (d) Tata! overeag ‘ecto! Orthod ond enue mete by determining ihe cilterence between Ine ovemeod, you need Soe Ovtthead. Given mor ne rater cecured 1% ooo evel o00 ted overrwod. he fxed overheod rte of he 9% octely 108,000 Fxedom 700 by 42,000 + P30,000 + P15,000 = P87,000 (<) 52: {o) The overheod spending variance & the cference between actuot factory overhead ‘ond budgeted overhead based on actual hous. Therefore. spending varionce would bbe F800 computed a flows: ‘Actual Factory Overhead (P10,300 + P19,500) ~ P29,800 Less: Budgeted Overhead Allowed based on 139,000 (P4 VOH + PI FOH) = 195,000 (a)yal Factory Overhead, (as suageted Ovetheo Hous (32,000 hes.) Fined a5 DUdgeIED Variable (P5 x 32,000 ho Controllable Variance - Unfavorable ditlerence between the budgeted fed overhead ond ine re Mead applied based on the sandakd hours allowed times the standord fieg Ovetnead fore and ihe standard input allowed for actual oulput. An unfavorable Soonee resuits when budgeted overhead is greater than applied overhead. Ihe volume varionce is the Budgeted Fixed Overhead ... P7500 Less: Standard Fixed Factory’ (P3/hr. x 24,000 hours)... Volume Variance - unfavorable 72900 P_3,000 (a) 57. (¢) : 1) This voionce equot the slandord rote per unit of the’ actity measure (atest Losetounl ims te offorence between he acivl actly ond the stondord acy ferihe ocivo ouput ; Stondord Cosi (Seeded the standard hours octuor = Ovo vonable overhead incured Actual Voriable Overhead... Less: Budgeted Variable Overhead bax ‘actual hours (4,700): PRK ATOD vecnen - 9400 Variable Overhead Spending Variance - unfavorable ... 100 (d) Ine varobie ovetnead spending voronce so pice vatonce. Nhe diterence Derween actual vaioble overieod cask (ocion sche Set dnd actual ocivy hos the standard aie 1 O° Mes he oct rte) ‘Actual Variable Overhead Less: Budgeted Variable. (17/200 hours): P6* x 17.200 .... Variable Overhead Spending Variance - Us 108,500 s P_$,300(b) *{P135,000 x 80%) + (2 hrs./unit x 9.000 units favontity) variance is he stondora variable Ihe variable overneoa " between the actual actly and ihe stancord Difference in hous... Multiplied by: Variable Overhead Rate ... Yoriable Overhead Efficiency Variance — Unt... The fixed overhead budget spending vorionce is the ference belween actual xed costs ond budgeted nec Coss Actual fixed overhead ..., Less: Budgeted fixed (20% xP135,000) Fixed overhead budget (spending) variance - unt.. (d) 10d erence # he erence between DUSGEIEM fe 2 ed ene, ng standard ed overead fore Hes Ie stoncarg 8 or ed oy re vo! OU ayageted fed overhead (P 135.000 x20R) 27.600 ‘siondard fixed factory Overn : esp 3" x 17000 hous) “25500 Fixed overhead volume variance - Unt. P-1.500(0) 20%) + {2 hr. /U x 9,000 units) = P15 sey ours 2h x 8,500 actual production = 17,000 hours. in underapplcaton of fred ovemead ks unfavorable becouse it incicates cn uncenvse Piccitles, that i. octivily wos fess than budgeled. Unike other variances, this otence does no! measure deviations trom expected costs But rather departure from Ihe expected use of productive copacity. (d) sore deoecotn he cout na com wl bene production. Therefore, the budge! for September would {258,000 anowcl depreciation x 1/12) ‘Actual units produced Divided by: Units per hour... Standard hours Less: Actual @ t Baxi of Alocation Factors Ovemneod Alocoted Sarmenis” 1900/2,000 Pi Bo 0 ean 1290000 Psoo.con ‘Any che trvee bases of ailocation wil yield ine some'amount of alocoted overhead. (0) ore ine erect bec the overeod vol Answer {9} 's incomect because an unfovorable labor rate variance means the octuo! labor rate exceeds standard. Answer it ord ‘Diane vonence mest eeu ese weashaemenera Hite am its es teeta ean ‘Seta atts anata ares ee 0. ‘ond the fixes overnead Budge! vorionces used In four-way aroha.pia a see etcency voronce in ee. OF OUEMOY Oa acon ens os ce es tie ee oe ond f) oe neoreel ecco re oo fos ence Owe Doge Pe Procweton volure IO Cres ovemeed applied based on the predetermine oa -d for the actual output. Chapter 22 ‘answet to) 0c ore! a aeeersesat ue rondo Bo HOWE 68. (d) .ding variance is the difference between octual tc Iritveeway ono he spend eer ond the vrtoble overhecd Boxed on Backflush Costi Cre ne oe os combines the Varoble OVemEOG Spencing Achar ng System and “Based Costing tne actual nput of the reac ed ovetnead Budge! variances vied in four-way anotyss 6. (0) suckteh Costing System O20 spencing variance I the diference belween actual O/H incured and the Blageted O1f of actual nous. essence, ths is the overhead “rate” variance. inconect pecause actual O/H rather than stondard O/H should be used, ‘rect because actual rather than standard hours should be used, ‘correct because ocival Cos! and hours should be used rather than standard cost and hours. 70. (a) i Voriobie overhead includes humerous items, aad on-overall fate is required. the ‘pendhg voronce & made up of many price ond quontilydflerences, some favorable, fome unlovoroble. The spending volonce is the difference Detween actual factory ‘verheod incured ond budgeted Ictor overhead based on actual hours worked u ‘Afswers (b) and (c} ore incorrect becouse the spending variance is concemed with both price and quantity differences. Answer (d) is incoect becouse o change in production volume wil not atfect the spending variance, although !t would affect the efficiency variance. 1091