MULTIPLE CHOICES – THEORITCAL

1. The advantages of standard costs include all of the following except:

a. Management by exception may be used.
b. Management planning is facilitated.
c. They may simplify the costing of inventories.
d. Management must use a static budget.
2. The type of standard that is intended to represent challenging yet attainable results is:
a. Theoretical standard
b. Flexible budget standard.
c. Controllable cost standard
d. Normal standard.
3. Standard costs are used for all of the following except:
a. Income determination
b. Controlling costs
c. Measuring efficiency
d. Establishing budgets.
4. The labor efficiency variance is computed as:
a. The difference between standard and actual rates, multiplied by standard hours.
b. The difference between standard and actual hours, multiplied by standard rates.
c. The difference between standard and actual rates, multiplied by actual hours.
d. A percentage of the labor time variance.
5. The purpose of standard costing is to:
a. Allocate cost with more accuracy.
b. Eliminate the need for subjectives decisions by management.
c. Determine the break-even production level.
6. Which of the following is correct about overhead variances?
a. The controllable variance generally pertains to fixed overhead costs.
b. The volume variance pertains solely to variable overhead costs.
c. Standard hours actually worked are used in each variance.
d. Budgeted overhead costs are used on the flexible overhead budget.
7. The formula to compute the total overhead variance is:
a. Actual overhead less overhead applied.
b. Overhead budgeted less overhead applied
c. Actual overhead less overhead budgeted.
d. No correct answer given.
8. In computing variances from standard costs, the difference between actual and standard price
multiplied by actual quantity purchased yields a:
a. Price variance.
b. Volume variance.
c. Mix variance.
d. Yield variance.
9. What type of direct materials variance for price and quantity will arise if the actual number of units
of materials used was less than standard units allowed but actual cost exceeds standard cost?
Quantity Price
a. Unfavorable Favorable
b. Favorable Favorable
c. Favorable Unfavorable
d. Unfavorable Unfavorable
10. In analysis manufacturing overhead variance, the volume variance is the difference between the:
a. Actual amount spent for overhead items during the period and the amount applied during the
period.
b. Variable efficiency variance and fixed efficiency variance.
c. Amount shown in the flexible budgeted and the amount shown in the master budget.
d. Budget allowance based on standard hour allowed for actual production for the period and the
amount of applied factory overhead during the period.
MULTIPLE CHOICE – COMPUTIONAL

1. Information about Malate Company direct material costs is as follows:

Standard unit price P3.60
Actual quantity purchased 1,600
Standard quantity allowed for actual production 1,450
Materials purchase price variance – unfavorable P240

What was the actual purchase price per unit, rounded to the nearest centavos?
a. P3.06
b. P3.75
c. P3.11
d. P3.45
2. Data for Sunday Company’s direct materials costs for June is as follows:
Actual quantity of direct materials purchased 30,000 units
Actual cost of direct materials P 84,000
Unfavorable direct materials quantity variance P 3,000
Standard quantity of direct materials allowed for June production 29,000 units

For the month of June, Sunday’s direct materials price variance was:
a. P2,800 unfavorable.
b. P2,800 favorable.
c. P6,000 favorable
d. P6,000 unfavorable.
3. Monday, Inc. uses a standard cost system to account for its only product. The materials standard
per unit was 4 kilos at P5.10 per kilo. Production data for April were as follows:
________________________________________________________________
Materials used 7,800 kilos
Cost of materials used P40,950
Number of finished units produced 2,000
________________________________________________________________
What is the materials quantity for April?
a. P1,020 favorable
b. P1,050 favorable
c. P1,170 unfavorable
d. P1,020 unfavorable
4. Lolo, Inc. uses a standard costing system in manufacturing a certain shirt. Each unit of finished
product contains 2 meters of direct materials. However, a 20% direct material spoilage
calculated on input quantities occurs during the manufacturing process. The cost of direct
material is P30 per meter. The standard direct material cost per unit of finished product is:
a. P48.50
b. P60.00
 c. P72.50
d. P75.00
5. Information about Mamala Company’s direct material costs for the month of June 2018 was as
follows:
________________________________________________________________________
Actual quantity purchased 18,000
Actual unit purchase price P 3.60
Materials price variance - unfavorable P 3,600
Standard quantity allowed for actual production 16,000
Actual quantity used 15,000
________________________________________________________________________
For June 2018, what is the materials quantity variance?
a. P3,400 favorable
b. P3,400 unfavorable
c. P3,600 favorable
d. P3,600 unfavorable
6. Tuesday, Inc. which uses standard cost system, had 5,000 units of raw material X in its inventory
on June 1, 2018. These materials was purchased in May for P12.00 per unit and carried at a
standard cost of P10.00. The following information pertains to raw material X for the month of
June 2018.
_________________________________________________________________________
Actual number of units purchased 14,000
Actual number of units used 15,000
Standard number of units allowed for actual production 13,000
Standard price per unit P 10.00
Actual price per unit P 11.00
_________________________________________________________________________
The materials purchase price variance for Raw Material X for June was:
a. P14,000 favorable
b. P14,000 unfavorable
c. P15,000 favorable
d. P15,000 unfavorable
7. Data about direct labor of Friday Company is given below:
________________________________________________________________________
Standard direct labor hours 30,000
Actual direct labor hours 29,000
Direct labor efficiency variance – favorable P 4,000
Direct labor rate variance – favorable P 5,800
Total payroll P110,200
__________________________________________________________________________
 What was Friday’s actual and standard direct labor rate?
Actual Direct Standard Direct
Labor Rate Labor Rate
a. P2.60 P3.54
b. P3.80 P4.00
c. P4.00 P3.80
d. P5.80 P5.80
8. Information on Ten Company’s direct labor costs is as follows:
________________________________________________________________
Standard direct labor rate P 3.75
Actual direct labor rate P 3.50
Standard direct labor rate 10, 000
Direct labor efficiency variance – unfavorable P 4, 200
_________________________________________________________________
What were the actual hour worked, round to the nearest hour?
a. 11,914
b. 10,714
c. 11,120
d. 11,200
9. Each unit of product O requires two direct labor hours. Employee benefits cost are treated as
direct labor costs. Data on direct labor are as follows:
____________________________________________________________________
Number of direct employees 25
Weekly productive hours per employee 30
Estimated weekly wages per employee P 240
Employee benefits 25%
____________________________________________________________________
The standard direct labor s per unit of Product O is:
a. P20
b. P10
c. P12
d. P22
10. The direct labor standards for producing a unit of a product are two hours at P10 hour.
Budgeted production was 1,000 units. Actual production was 900 units and direct labor cost was
P10,000 for 2,000 direct labor hours. The direct labor efficiency variance was:
a. P1,000 favorable
b. P2,000 unfavorable
c. P1,000 unfavorable
c. P2,000 favorable
PROBLEM:
The Ace Company manufactures a product that is processed through two departments, the
Cooking Department and the Finishing Department. All materials are entered into production in
the Cooking Department. Standard costs for raw materials and labor in the Cooking Department
for each unit of product are shown below:
______________________________________________________________________________
Raw Materials (per unit of production)
RM-1: 20 liters @ P1.20 per liter P24.00
RM-2: 7 pints @ P1.44 per pint 10.08
Standard materials costs per unit P34.08
Labor in Cooking Department :
15 minutes @ P384 per hour P 4.80
______________________________________________________________________________
During the month of April 2018, 10,000 units of product were manufactured. The actual costs of
materials and labor in the Cooking Department were as follows:
______________________________________________________________________________
Raw Materials:
RM-1: 20,100 liters P233,160
RM-2: 6,950 pints 101,192
Total materials costs P334,352
Direct labor: Cooking Department : 258 hours P 50,568
______________________________________________________________________________
Required: Prepare journal entries on April 30, 2018, to:
a. Charge the standard costs of materials to production, record the actual costs of the raw
materials used, and record the materials variances, using separate accounts for materials
quantity variances and materials price variances.
b. Charge the standard costs of labor in both departments, remove the actual labor costs from
Factory Payroll accounts, and record labor efficiency and labor variances.