CPA REVIEW SCHOOL OF THE PHILIPPINES Manila cial Accounting Guerrero/German/DeJesus/Lim/Ferrer/Laco/Valix ie Advanced Fi Standard Co Part J: Theory of Accounts Under Standard Costing System, direct material price variance shall be appropriately recorded or computed a. At the time of purchase b. At the time of usage from raw materials to work in process c. At the time of disposal of finished goods d. At the time of conversion from work in process to finished goods 2. At the time of recording of material price variance, the material price variance account is credited. Which of the following is correct? a. The raw materials actually used are higher than the standard raw materials. b. The actual price of raw materials is lower than the standard price of raw materials. c. The raw materials actually used are lower than the standard raw materials. d. The actual price of raw materials is higher than the standard price of raw materials. If the raw material actual used are higher than the standard raw materials, the journal entry to record the variance will include a. Debit to material usage variance b. Credit to material usage variance c. Debit to material price variance 4. Credit to material price variance 4. At the time of recording of direct labor efficiency variance, the said variance account is debited. Which of the following is correct? a. The actual direct labor hours are higher than the standard direct labor hours. b. The actual direct labor hours are lower than the standard direct labor hours. ¢. The actual direct labor rate is higher than the standard direct labor rate. d. The actual direct labor rate is lower than the standard direct labor rate. 5. If the actual direct labor rate is lower than the standard direct labor rate, the journal entry to record the variance will include a. Debit to direct labor efficiency variance b. Credit to direct labor efficiency variance ¢. Debit to direct labor rate variance d. Credit to direct labor rate variance 6. Which of the following statements concerning the responsibility for direct material and direct labor variances is incorrect? a. Asa general rule, material price variance is the responsibility of purchasing manager. b. Ase general rule, material usage variance is the responsibility of production manager. c. Asa general rule, direct labor rate variance is the responsibility of purchasing manager. d. Asa general rule, direct labor efficiency variance is the responsibility of production manager. 7. If the company reports favorable material price variance and unfavorable material usage variance, what is the most probable reason? a. Acquisition of inexpensive/cheap but low-quality materials b. Acquisition of expensive but high-quality materials, c. Hiring of experienced but highly paid laborers. d. Hiring of inexperienced but lowly paid laborers, 871310, iM. 12. 14, Page 2 If the company reports unfavorable material price variance and favorable material usage variance, what is the most probable reason? 1. Acquisition of inexpensive/cheap but low-quality materials. b. Acquisition of expensive but high-quality materials. ¢. Hiring of experienced but highly paid laborers. 4. Hiring of inexperienced but lowly paid laborers. If the company reports favorable direot labor rate variance and unfavorable direct labor efficiency variance, what is the most probable reason? a. Acquisition of inexpensive/cheap but low-quality materials. b. Acquisition of expensive but high-quality materials, c. Hiring of experienced but highly paid laborers, d. Hiring of inexperienced but lowly paid laborers, If the company reports unfavorable direct labor rate variance and favorable direct labor efficiency variance, what is the most probable reason? &. Acquisition of inexpensive/cheap but low-quality materials. b. Acquisition of expensive but high-quality materials. . Hiring of experienced but highly paid laborers. d. Hiring of inexperienced but lowly paid laborers. Which of the following statements concerning the responsibility for factory overhead variances is incorrect? a. Factory overhead efficieney variance is the responsibility of production manager. b. Factory overhead variable spending variance is the responsibility of purchasing manager for indirect materials or human resource manager for indirect labor. c. Factory overhead fixed spending variance is the responsibility of purchasing manager. 4. Factory overhead volume variance is the responsibility of both production manager and purchasing manager. Which of the following factory overhead variances is pure variable? a. Spending variance b, Controllable variance c. Efficiency variance d. Volume variance Which of the following factory overhead variances is pure fixed? Spending variance Controllable variance Efficiency variance Volume variance Bege In the computation of standard fixed factory overhead cost per labor hour, the total budgeted total fixed factory overhead shall be divided using a, Actual direct labor hours b. Standard direct labor hours based on actual units produced cc. Normal capacity of production in labor hours d. Actual direct labor hours last year 8713Page 3 Part roblems 1. HQ Ine. uses standard costing for the accounting of its product. The budget officer provided the following standard data imposed by the top-level management concerning the direct materials: > Standard direct material is 3 per unit of the product. > Standard price is PS per unit of direct material During the year, the company acquired on account 1,000 units of direct material at a total cost of 4,000. It also manufactured 150 products using 750 direct materials. The journal entry to record the material purchase variance will include a. Debit to raw materials at P4,000 b. Credit to accounts payable at P3,750 ¢. Debit to material price variance at P750 4. Credit to material price variance at P1,000 2. Using the same data in number 1, the journal entry to record the material usage variance will include Debit to work in process at P1,800 b. Credit to raw materials at P3,000 c. Debit to material usage variance at P1,500 d. Credit to material usage variance at P1,200 3. ISO Inc. is employing standard costing for its product. For the year ended December 31, 2020, it provided the following data: > During the year, the company acquired 1,500 units of direct materials at a total cost of P15,000. > The journal entry to record the material variance during the year includes a credit to material usage variance in the amount of P700. > The standard direct material is 5 per product, > The company manufactured 200 units of product using 900 direct materials. The journal entry to record the material price variance will include a a, Debit to material price variance of P4,500 b. Debit to material price variance of P2,700 c. Credit to material price variance of P10,500 d. Credit to material price variance of P6,300 4. Q-Prod Inc. has provided the following standard direct labor cost for its product: > Standard direct labor is 2 hours per unit of the product, > Standard rate is P15 per direct labor hours. During the year, the company produced 1,000 units of the product through 1,800 direct labor hours at a total labor cost of P36,000. The journal entry to record the labor variances will include will include a. Debit to direct labor rate variance of P9,000. b. Debit to direct labor efficiency variance of P3,000 ©. Credit to salaries payable of P30,000 d. Debit to work in process of P36,000 5. LQ-Man Inc. has debited direct labor efficiency variance in the amount of P3,000 in the journal entry to record the variance. During the year, it manufactured 3,200 units of product using 6,600 direct labor hours at a total cost of P79,200. Each unit of product requires 2 standard direct labor hours. What is the debit/credit to direct labor rate variance at the time of recording? a. P19,800 credit b. P6,400 debit c. P16,800 credit 4. P3,000 debit END 8713