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CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

MANAGEMENT ADVISORY SERVICES
STANDARD COSTING & VARIANCE ANALYSIS

THEORY
1. 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 over-exertion, provided they
adhere to the specified method of working and are well motivated in their work?
A. Standard time B. Standard hours C. Standard unit D. Standard performance

2. The best characteristics of a standard cost system is
A. standard can pinpoint responsibility and help motivation
B. all variances from standard should be reviewed
C. all significant unfavorable variances should be reviewed
D. standard cost involves cost control which is cost reduction

3. Standard costs are used for all of the following except:
A. income determination C. measuring efficiencies
B. controlling costs D. forming a basis for price setting

4. Standard costs are least useful for
A. Measuring production efficiency C. Job order production systems
B. Simplifying costing procedures D. Determining minimum inventory levels

5. To which of the following is a standard cost nearly like?
A. Estimated cost. B. Budgeted cost. C. Product cost. D. Period cost.

6. A difference between standard costs used for cost control and budgeted costs
A. Can exist because standard costs must be determined after the budget is completed.
B. Can exist because standard costs represent what costs should be while budgeted costs
represent expected actual costs.
C. Can exist because budgeted costs are historical costs while standard costs are based on
engineering studies.
D. Can exist because establishing budgeted costs involves employee participation and
standard costs do not.

7. Normal costing and standard costing differ in that
A. the two systems can show different overhead budget variances.
B. only normal costing can be used with absorption costing.
C. the two systems show different volume variances if standard hours do not equal actual
hours.
D. normal costing is less appropriate for multiproduct firms

8. When standard costs are used in a process-costing system, how, if at all, are equivalent units
of production (EUP) involved or used in the cost report at standard?
A. Equivalent units are not used.
B. Equivalent units are computed using a special approach.
C. The actual equivalent units are multiplied by the standard cost per unit.
D. The standard equivalent units are multiplied by the actual cost per unit.

9. The type of standard that is intended to represent challenging yet attainable results is:
A. theoretical standard D. normal standard
B. flexible budget standard E. expected actual standard
C. controllable cost standard

MSQ-04
Page 1

C. Which department is typically responsible for a materials price variance? A. D. Management by exception. B. purchasing agent 19. includes only fixed costs. A. B. Purchasing and industrial engineering. is a plan for a single level of sales (or other measure of activity). used with variable costing while a standard fixed cost is used with absorption costing. C. B. C. D. Capital budget. Material use variance. Costs will be controlled better than if lower standards were used D. D. while a variable budget can be changed after the period begins B. A company using very tight standards in a standard cost system should expect that A. B.10. Variable overhead efficiency variance. based on practical capacity and a standard fixed cost can be based on any level of activity. Lanta Restaurant compares monthly operating results with a static budget. D. 13. Employees will be strongly motivated to attain the standard 11. A predetermined overhead rate for fixed costs is unlike a standard fixed cost per unit in that a predetermined overhead rate is A. C. D. Which of the following term is best identified with a system of standard cost? A. would Lanta usually report favorable variances on variable food costs and fixed supervisory salaries. Sales. while variable budget includes only variable costs D. 17. production supervisor C. Sales and industrial engineering. If a company wishes to establish factory overhead budget system in which estimated costs can be derived directly from estimates of activity levels. C. Standard accounting system. 12. Production. Marginal costing. supplier B. one for each of several levels of sales (or other measure of activity) C. C. Fixed budget. Discretionary budget. while a variable budget consists of several plans. Most variances will be unfavorable B. cannot be changed after the period begins. Material price variance. accountant D. Under a standard cost system. while a variable budget is concerned with expenses that vary with sales 15. Contribution approach. MSQ-04 Page 2 . When actual sales are less than budget. B. it should prepare a A. Production and industrial engineering. No incentive bonus will be paid C. B. The primary difference between a fixed (static) budget and a variable (flexible) budget is that a fixed budget: A. Flexible budget. D. B. is concerned only with future acquisitions of fixed assets. Which of the following people is most likely responsible for an unfavorable variable overhead efficiency variance? A. C. based on an input factor like direct labor hours and a standard cost per unit is based on a unit of output. Engineering. Labor rate variance. Purchasing. 16. 18. likely to be higher than a standard fixed cost per unit. Which variance is LEAST likely to be affected by hiring workers with less skill than those already working? A. D. the materials efficiency variance are the responsibility of A. Variable food costs Yes Yes No No Fixed supervisory salaries Yes No Yes No 14. Purchasing and sales.

B. C. Materials mix. Which of the following unfavorable variances is directly affected by the relative position of a production process on a learning curve? A. D. Price variance Unfavorable Favorable No effect Favorable Usage variance Favorable Unfavorable Unfavorable Favorable 23. When expenses estimated for the capacity attained differ from the actual expenses incurred. Labor efficiency.000 $9. Labor rate. Factory overhead cost D. 29. C. 26. 25. Activity variance. The variance resulting from obtaining an output different from the one expected on the basis of input is the: A. D. Labor Rate Variance Favorable Favorable Unfavorable Unfavorable Labor Efficiency Variance Favorable Unfavorable Favorable Unfavorable 28. the resulting balance is termed the A. Overhead efficiency. Variable cost. Labor efficiency. yield variance D. actual hours exceed standard hours C. 21. Materials usage. Using the two-variance method for analyzing overhead. A credit balance in the labor efficiency variance indicates that: A. Controllable (Budget) Variance Yes Yes Yes No Volume Variance Yes Yes No No Efficiency Variance Yes No No No 24. B. B. For the doughnuts of McDonut Co. As to the material variances.000 bags of flour with a quality rating two grades below that which the company normally purchased. Labor rate variance. C. D. C. D. C. what will be the likely effect? A. If the actual labor rate exceeds the standard labor rate and the actual labor hours exceed the number of hours allowed. Volume variance. Direct material cost B. B. which of the following variances contains both variable and fixed overhead elements? A. the item which receives the most diverse treatment in accounting is A.820 What variance was $980? A. Labor efficiency variance. Volume variance. B. standard hours exceed actual hours B. Materials price. actual rate and actual hours exceed standard rate and standard hours 27. In the analysis of standard cost variances. B. usage variance C. Which of the following standard costing variances would be least controllable by a production supervisor? A. Overhead volume. standard rate and standard hours exceed actual rate and actual hours D. Budget variance.800 $8. MSQ-04 Page 3 . the labor rate variance and labor efficiency variance will be A. C. C.20. Labor spending variance. A manager prepared the following table by which to analyze labor costs for the month: Actual Hours at Actual Hours at Standard Hours at Actual Rate Standard Rate Standard Rate $10. mix variance B. This purchase covered about 90% of the flour requirement for the period. D. the Purchasing Manager decided to buy 65. efficiency variance 22. D. D. B. Unfavorable variance. Direct labor cost C.

B. Same except for practical capacity C. 31. Same except for expected capacity D. The under. B. Because of the production schedule. fell short of denominator hour by 1. C. Price differences for overhead costs C. The difference between budgeted cost and actual cost of fixed overhead items. D. practical capacity. exceeded denominator hours by 1.or over-applied fixed cost element of overhead. Management desires to detect such variances to be able to plan for promotions. relatively low-paid unskilled workers. During January. For the month of January. Variable costing approach because of production exceeding the sales for the period. The difference between actual overhead costs and budgeted overhead. Based on actual hours worked for the units produced. B.or over-applied variable cost element of overhead. Quantity differences for overhead costs D. It is desirable under conventional knowledge on good management. This variance results from A. The mix of workers assigned to the particular job was heavily weighted toward the use of new. 33. Variable costing approach because of sales exceeding the production for the period. and expected activity levels would be the A. exceeded denominator hours by 1. B. the fixed manufacturing overhead volume variance was $2. experienced individuals. The mix of workers assigned to the particular job was heavily weighted toward the use of higher-paid. B. Differences caused by production volume variation 36. Henley Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of direct labor hours. 34. B. Defective materials caused more labor to be used to product a standard unit. Absorption costing approach because production differs from that used in setting the fixed overhead rate used in applying fixed overhead to production. 32. the volume variance is A. D. Price and quantity differences for overhead costs. D. Management needs to determine the benefits foregone by such variances. Absorption costing approach because of production exceeding the sales. D.85 per direct labor hour. A spending variance for variable factory O/H based on direct labor hours is the difference between actual variable factory O/H and the variable factory O/H that should have been incurred for the actual hours worked. The variable factory overhead rate under the normal volume. C. The production volume variance occurs when using the A.000. the standard direct labor hours allowed for the month's output: A. B. C. The company uses a fixed manufacturing overhead rate of $1. D.200. The under. Management recognizes the need to know why variances happen to be able to make corrective actions and fairly reward good performers. Management scrutinizes variances because A. Same for all three activity levels MSQ-04 Page 4 . If a company uses a predetermined rate for absorption of manufacturing overhead.200. fell short of denominator hours by 1. The difference between budgeted cost and actual cost of variable overhead items.000. C. The difference between budgeted overhead and applied overhead. Same except for normal volume B. D. 35.30. 37. The difference between actual overhead costs and applied overhead. Which of the following is the most probable reason a company would experience an unfavorable labor rate variance and a favorable efficiency variance? A. The total overhead variance is A. C. C. workers from other production areas were assigned to assist in this particular process.220 favorable.

Only when direct materials are purchased B. C. Standard hours exceed actual hours. Inadequately training and supervising the labor force. Processing a large number of rush orders. Poor scheduling of direct labor hours B. This situation can be due to A. Overapplied factory overhead results when A. B. Overhead being substantially composed of variable costs. The activity level selected for allocating factory O/H to the product was based on 80% of practical capacity. D. A debit balance in the labor efficiency variance indicates that A. Cost of goods sold and inventories C. C. Actual rate exceeds standard rate. B. 45. B. estimated the cost of a project it started in October 19x4 as follows: Direct materials. A plant is operated at less than its normal capacity. D. Usage Unfavorable Favorable Favorable Unfavorable Price Favorable Favorable Unfavorable Unfavorable 41. C. C. The journal entry to record the direct materials quantity variance may be recorded A. Cost of goods sold PROBLEMS 1. D. Unusually lengthy machine breakdowns D. how would the reported unfavorable spending and volume variances have been affected? A. When inventory is taken at the end of the year. Products being simultaneously manufactured in single runs. What type of direct material variances for price and usage will arise if the actual number of pounds of materials used was less than standard pounds allowed but actual cost exceeds standard cost? A. 40. Spending Variance Increased Increased Unchanged Unchanged Volume Variance Unchanged Increased Increased Unchanged 44. Either (a) or (b) D. B. During 1990. Production data indicated that volumes were lower than the plan by a large difference. variable overhead. Setting standard efficiency at a level that is too low C. B. D. A balance sheet account D. D. Standard rate exceeds actual rate. C. An income or expense account B. Cutting back preventive maintenance. B. Only when direct materials are issued to production C. Factory overhead costs incurred are unreasonably large in relation to the number of units produced. 39.38. 6. a department’s three-variance factory O/H standard costing system reported unfavorable spending and volume variances. Producing more units than planned for in the master budget. Actual hours exceed standard hours. Overhead being substantially composed of fixed costs. Factory overhead costs incurred are greater than the costs charged to production. A reduction in direct labor training 42. If 100% of practical capacity had been selected instead. KNOTTY. C.000 hours at P30 per hour. Which one of the following would not explain an adverse direct labor efficiency variance? A. All of the following are possible explanations for this variance except A. You used predetermined overhead rates and the resulting variances when compared with the results using the actual rates were substantial. Overhead costs being recorded as planned. D. Inc. 46. direct labor. 43. A company reported a significant materials efficiency variance for the month of January.000. Standard costing will produce the same results as actual or conventional costing when standard cost variances are distributed to A. P495. Factory overhead costs incurred are less than the costs charged to production. P24 per MSQ-04 Page 5 .

700. 1.500. SUPER Co.250 F.650 hours at P30 per hour. In November.500 U D. The materials price variance for the units used in November was A.90 /scarf Purchase discounts from supplier 3% Sales discount to customers 2% The allowance for rejected scarf is not part of the 0. B. MSQ-04 Page 6 . ChemKing uses a standard costing system in the manufacture of its single product. $500. $2. the materials quantity variance was $1.favorable P6. $12. The Porter Company has a standard cost system. P1. and two units of raw material are required to produce one unit of final product.725 F. and there was an unfavorable quantity variance of $2. P17. $3.000. Four units should be completed in an hour. The standard allowed for material was $60. In July the company purchased and used 22.900. the variable overhead amounted to P113. and.000 savings.00 Allowance for rejected scarf 5% of production Yards of cloth needed per scarf 0.500. Last year.000 for variable items and P3.21 D. D.400 U C.000 U C. Calculate the standard cost of cloth per scarf that Hankies Unlimited should use in its cost sheets. $300. P75.200.000 What was the actual purchase price per unit? A.500 U B. C. at normal capacity. P16. P89. and the standard quantity of materials allowed for July production was 21. The total variance for the project as at the end of the month was A.000 units of raw material in inventory were purchased for $105. C. P88. what is the amount of the contractor's current overrun or savings on this design work? A. all the required materials have been used at P491.000 F D.00 Actual units purchased 40. $700. Hankies Unlimited has a signature scarf for ladies that is very popular. P8.000 units of product.500 F 7. If the design phase of the project is 60% complete. Direct materials statistics for the month of May. P9. All labor hours were paid at the standard rate.000 B.250 Materials price variance.000 3. P85. $3.00 B. A. ALPHA Co. B. Certain production and marketing data are indicated below: Cost per yard of cloth P36.750 pounds.000 overrun. labor was 80% complete at 4. $11.000.500 U B. By the end of the month.60/yard Motor freight to customers P0. direct labor hour. Variable factory overhead is applied at the rate of P12 per labor hour.87 B. $500.500 pounds of direct material at an actual cost of $53.50 D. A defense contractor for a government space project has incurred $2. Rejects have no market value. 4. The materials price variance for July was: A. The 35.875 Unfavorable.000 D. P750. by producing at more than standard.00 F 2. P18. The total labor and overhead costs saved. P17.250 U.85 6.000 in actual design costs to date for a guidance system whose total budgeted design cost is $3.000. the company produced 12. $2.000 overrun.725 U. $3.000.000 Standard units allowed for actual production 36. operates at 600. P7.475 yard Airfreight from supplier P0. P450.000.89 C. uses a standard cost system. P500.000 C.000 units were produced using 300.475 yard of cloth per scarf. Materials are used at the start of production.000 savings.000 fixed items. amounted to A. D.000 labor hours with standard labor rate of P20 per hour. P9. 19x7 are summarize below: Standard unit price P90.000. and actual overhead cost consisted of P3.000 labor hours. $2.30 5.76 C.738.350.

000 and budgeted variable overhead of P240. B.000.50 each.40 per hour 14. instituted a bonus plan where employees are paid 75% of the time saved when production performance exceeds the standard level of production.20 per hour B. Pane Company's direct labor costs for April are as follows: Standard direct labor hours 42. $15. and new employees hired at higher rates resulted in an actual average wage rate of P16.375.840 What is Pane's direct labor rate variance? A. $3.496 U B. $3. The total number of standard direct labor hours allowed for the actual units produced is A. has a maintenance shop where repairs to its motor vehicles are done. The company computes the bonus on the basis of four-week periods. and the wage rate is P24 per hour. C.735 favorable quantity variance.160 units 10. P28.000. 1.000 kilograms Actual unit purchase price $ 3. certain recorded were lost. During last month’s labor strike. 11.25 per hour D.400.000 Actual direct labor hours 41.440 F D. $49.200 Direct labor efficiency variance – favorable $3. Cox Company's direct material costs for the month of January were as follows: Actual quantity purchased 18.80 per hour C. $49. C.200 Total direct labor payroll $247. $3. The following direct labor information pertains to the manufacture of product Glu: Time required to make one unit 2 direct labor hours Number of direct workers 50 Number of productive hours per week. $3. P62. P27. $44. D.910 units of component X for P22.000 kilograms Actual quantity used 15. Each employee works 37 hours per week.600 Standard quantity allowed for actual production 16.500 B.000.000 C. $24. P31. TAMARAW. $50.000 units D. P30. 9. per worker 40 Weekly wages per worker $500 Workers’ benefits treated as direct labor costs 20% of wages What is the standard direct labor cost per unit of product Glu? A.800.00 per hour. how many units of finished product were produced? A. The standard direct labor rate was P28. The actual direct labor rate was A. P60. JKL generated a P220 favorable price variance and a P3.145. P70.148.8. $12.000. Below are data for one 4-week period: MSQ-04 Page 7 . D. Labor trouble caused an unfavorable labor efficiency variance of P120. The actual input of direct labor hours was 1. To improve productivity. MICHAEL Corp. 1. C.000 12. ACE Company’s operations for the month just ended originally set up a 60. The actual results revealed that direct labor incurred amounted to P1.60 per kilogram Materials price variance – unfavorable (based on purchases) $ 3.500 D. JKL purchased 14. but an unexpected labor shortage necessitated the hiring of higher-paid workers for some jobs and had resulted in a rate variance of P800. The standard production is set at 3 units per hour. $30. B.090 units.400.000 kilograms For January there was a favorable direct material quantity variance of A.440 U C. If there were no changes in the component inventory. ST.000 and that the unfavorable variable overhead variance was P40.400 F 13. P52. B. and the resulting direct labor budget variance was a favorable P3. Inc. with budgeted direct labor of P960.40 per hour. 994 units. 1.360. JKL Company has a standard of 15 parts of component X costing P1.000 direct labor hour level.

C.000 Freight out 10.000 18.20 per unit.000 direct labor hours. 22. with actual direct labor cost of $325.000 C. $12. based on a budgeted volume of 50.000 D.63 C. 25. Alan = P36 bonus. The following were among Gage Co.000 B.000 C.000 27.57 B. $6.000 MSQ-04 Page 8 . For the year. How many direct labor hours did MNO work? A. 15.000 under-absorbed.02 16.000 product units for 19x7. For the year ended December 31. $45. $6.000 17. Romy = P126 bonus.50 $6.’s 2000 costs: Normal spoilage $ 5. at a standard direct labor rate of $6 per hour.000 C. Tony = P252 bonus. 23.000 Fixed factory O/H $108.000.000 $54.000 Standard manufacturing costs 100. $50. $55.000 B. $25.000 over-absorbed. P2.000 under-absorbed.000 Excess of actual manufacturing costs over standard costs 20. Actual factory O/H amounted to $620. Assuming that actual factory O/H was equal to the budgeted amount for the attained capacity. P2. Nil Co.000 Total factory O/H rate per DLH $6. what is the amount of O/H variance for the year? A. MNO Company applies overhead at P5 per direct labor hour. Nil’s budgeted factory O/H was $600. $120.000. Joel = P54 bonus.93 D. In March 2001.000 B. B.000 and the company applies factory overhead on the basis of expected production level at the rate of P5.000 over-absorbed.000.000 D. $20. Weekly Production (Units) Employee 1st 2nd 3rd 4th Total ALAN 107 100 110 108 425 JOEL 104 110 115 115 444 ROMY 108 112 112 133 465 TONY 123 120 119 124 486 The employee who had the inconsistent performance (sometimes performing below standard) but got a bonus is A. P3. PALOS Manufacturing Co. C. Under applied overhead was P5.000 Actual prime manufacturing costs 80.000 $108. MNO incurred overhead of P120. The variable overhead cost per unit is A. 19. has an expected production level of 175. D. $12.000.000.000 Gage’s 2000 actual manufacturing overhead was A. 24. uses a predetermined factory O/H application rate based on direct labor cost.000 D.000 Variable factory O/H $48. P2. D. Fixed factory overhead is P450.00 Peters operated at 80% capacity during the year but applied factory overhead based on the 90% capacity level. $40. $30. B. over-applied factory O/H was A. Peters Company uses a flexible budget system and prepared the following information for the year Percentage of total capacity 80% 90% Direct labor hours 24.

000 Sales $100. P3. shipped) Planned Actual Sales order 800 780 Shipments 800 820 Units shipped 8.500 U.000 fixed overhead.000 Variable factory O/H $48. What is the fixed overhead volume variance for the year? A. At the beginning of the year.000 Minus: Total variable expenses 60. Actual results were 110. P35.500. How many units were produced this year? A.600 12. P10. budgeted the following: Units 10.000 Sales 240.000.000 F.000 F D. Shipping costs = P8.300 The actual shipping costs for the month amounted to P10. C. 23. 16.750 B. ABC Company uses the equation P300.313 C.000 direct labor hours.340 D. D.000 + P1. adopted the following budgeted formula for estimating shipping expenses.000 Total factory O/H per DLH $6.000 F. C. Mayo Corp. B.000 + (0. P11.000 Fixed 10.400 22. $10.590 D.000 Net income $ 20. $9.000 Factory overhead: Variable $ 30.50 Actual data for January were as follows: Direct labor hours worked 22.500.000 direct labor hours for the year. JKL Co. C.500 MSQ-04 Page 9 .000 U. The appropriate monthly flexible budget allowance for shipping costs for purposes of performance evaluation would be A. and underapplied factory overhead was $1. $13.075 C. P36.20. Factory overhead was applied on the basis of budgeted unit production.250. The company’s shipments average 12 kilos per shipment. What normal capacity was used to determine the fixed overhead rate? A. 9. $3.500.000 Fixed factory O/H $108. what is the budget (controllable) variance for January? A. Premised on past experience.500. 10. P10.000 Total factory O/H $147. B. At the end of the year. P2. 18.000 9. P297.875.250 B. 9.000.000 Total kilograms shipped 9. and P194.000 Standard DLH allowed for capacity attained 21.75 per direct labor hour to budget manufacturing overhead.500 variable overhead. Smith Inc. ABC has budgeted 125. 20.000 F 24. Universal Company uses a standard cost system and prepared the following budget at normal capacity for the month of January: Direct labor hours 24. has total budgeted fixed costs of P75. D. total factory overhead incurred was $39.000 There were no beginning inventories.000 U. P10.500 units resulted in a $3. 17. no work was in process.500 U.25 x kgs.000 Total fixed expenses 20.000 Using the two-way analysis of O/H variances. Actual production of 19. 21. 10.000 favorable volume variance.000 288. B.

$6. Web Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of machine hours.000 $156. then the total budgeted fixed overhead cost for the month was: A. the budgeted maintenance cost per machine-hour was: A. 27. $950 F D. the company operated at exactly 80% of capacity. $1. but applied manufacturing overhead to products based on the 90% level. C.50 Assuming that Tyro uses a three-way analysis of O/H variances.000 F. The company's fixed overhead volume variance for the year was: A. O/H was applied on the basis of 32.000 Denominator hours 150. the company used a denominator activity of 80. $1. B.000 standard machine hours were allowed for the month's actual production. During February. only 75. If budgeted fixed factory O/H was $480.400 unfavorable.000. B.000 machine hours in computing its predetermined overhead rate. 29. 31. $100.000 budgeted machine hours.000 Actual hours 3. $96.000 During the year. and budgeted variable factory O/H was $170.000 $ 48. B.000 108. Margolos. D.25.500 Standard hours 3. $12.400. $1. c.000. budgeted $7. TYD. actual $7. The following information is available from the Tyro Company: Actual factory O/H $15. P60. $102. maintenance cost is exclusively a variable cost that varies directly with machine-hours.000 27.000 favorable. If the fixed overhead volume variance for February was $6. $200 U 30. d. D. ends the month with a volume variance of $6. Patridge Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of direct labor hours.576 28.000 Fixed O/H expenses. 31.000 C. 26.360 unfavorable. C.000 Standard hours allowed for output 140. Inc. No volume variance. what is the spending variance? A. Inc. P60. $750 F. $750 U.000 Fixed overhead 108. what were the actual machine hours (AH) for the month? A.20. $6.000 under-applied. However. P60.600. At Overland Company.000 U.000 108. MSQ-04 Page 10 . 32.424 B.25.687 D. b.000. C.000 F.000 Variable overhead $ 42.000 Total overhead $150.000 $ 54.000 which is neither favorable nor under-applied.225. The information below is taken from the company's flexible budget for manufacturing overhead: Percent of capacity 70% 80% 90% Direct labor hours 21. B.000. $98. C. reported the following data for 1996: Actual hours 120.000 machine-hours were actually worked during July. If 8.275. The performance report for July showed that actual maintenance costs totaled $9.800 and that the associated spending variance was $200 unfavorable.200 Fixed O/H expenses. $1.000 $162.000 U D.800 Variable O/H rate per DLH $2.000 Fixed predetermined overhead rate P6 per hour Variable predetermined overhead rate P4 per hour TYD’s 1996 volume variance was a.000 24. $12. 32.

$68. An analysis of the factory overhead shows that in January. The applied factory overhead in January was A.000 U. $96. $12. P2.000 favorable.000 F.200 B.000 Actual direct labor hours worked 80.31.500 flexible budget based on standard input allowed for actual output. the variable overhead spending variance was: A. 33. $22. $6.800 C.400. Raff Co. C. P181. Inc.000 F. $9. $80. D. P188.500 and a favorable volume variance of P1. 37.000 direct labor hours: Variable overhead 2 DLHs @ $3 per DLH = $6 per unit Fixed overhead 2 DLHs @ $4 per DLH = $8 per unit The following information pertains operations during March: Units actually produced 38. 49. P186.500.000 Variable factory overhead P4. B. Daly had a $18. $67.000 U. The fixed overhead budget variance was A.: P39. 36. P183. The Murray Company makes and sells a single product. P500 unfavorable. a $15.000 Volume variance $4. the fixed overhead volume variance was: A. C.500 actual input at budgeted rate. $64.000 DLHS Actual fixed overhead costs incurred $66. $96. $70. Problems 33 and 34 are based on the following information.000 35.200 D. A. and $12.000 F. C.000 unfavorable variable overhead spending variance. D.000 Fixed overhead $384. P500 favorable.000 F.95 per direct labor-hour.125. has a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labor hours (DLHs).000. The factory uses a two-way analysis of factory overhead variances.5 DLHS Budgeted direct labor-hours (denominator activity) 72. P103.000 U.500 D. The actual factory overhead incurred in January was A. B. $10. the standard direct labor hours allowed were 25. D. The company recorded the following activity and cost data for May: Number of units completed 45.000 U.000 Actual manufacturing overhead incurred: Variable overhead $250.000 F. For March.500 B. D.000 favorable volume variance. The following standards are based on 100.275 U The fixed portion of the predetermined overhead rate is $0. C. The amount of fixed overhead contained in the company's overhead flexible budget for May was: A. Given for the variable factory overhead of GHI Products.500 Questions 35 & 36 are based on the following information.500 34.500 favorable flexible budget variance. For March.000 unfavorable. $16.275. B. the factory had an unfavorable budget (controllable) variance of P3. The MABINI CANDY FACTORY has the following budgeted factory overhead costs: Budgeted fixed monthly factory overhead costs P85. B. P103.000 U. P188.000 F.000 total over-applied overhead. D. $80. MSQ-04 Page 11 . Questions 37 thru 39 are based on the following information. C.200.000 U.00 per direct labor hour For the month of January. Compute the spending variance.500 C. P2.000 units Standard direct labor-hours allowed per unit of product 1. P2. 32. P186. B. $16. P41.

The cost per unit at 60% capacity is A. C 16. P6. The total materials price variance is A.750 units of Material E. D 19. has set a standard cost. B 14. A 42. D 9. The total materials quantity variance is A.76 42. P20. A 20. The flexible budget at the normal capacity activity level follows: Direct materials P 4. B 38. P21.175 units of Material E were used.25 per unit for Material E. A 35. except 1. D 41. $61. D 8. Valenzuela bought 7. A 34.25 F B. B 2. P13.25 per unit for Material D and P12.25 U Questions 42 and 43 are based on the following information. 40.25 F D.25 U C. C 18. A 45.000 units of Product F were made and 15. B 24.50 C. A 2.00 B. Valenzuela bought 17. At normal capacity. $6.15.656. B 1.000 Fixed factory overhead 1. In June. B 43.000 units per month. D 37. B 10. C 17. D 13.280 D. B 25.800 Cost per unit P 6. A 46. B 23.25 U C. P7.25 U 41. D 11.25 F D.781. In January. C 41. C 21. B 43.000 F. production in the department is 5.160 ANSWER KEY Theory Problem 1. P7.700. P30.400 F. D 15. A 40. D 28. B 31. Sta. $2. D 14.92 43.400 U. A 20.000 Indirect labor 3. B. $62. and other overhead are P0. A 32. B 39.500 units of Material D and 8. P27.200 Indirect materials 1. C 40. B 25.750. 7.25 per direct labor hour.500 C. D. C 10. B 9. C 18. C. A 27. A 36. Ana Company employs 25 workers in its Refining Department.781. A 21. P6. A 42. B 16.781. A 28. P2. C 24.781. C 44. C 27. C. 39. P6. working 8 hours a day. The total production cost for one month at 80% capacity is A. C 31. The amount of fixed manufacturing overhead cost applied to work in process during May was: A.760 B. $42. C 4.125.725. P5. A 12. A 6. indirect labor cost is 12½% of direct labor cost. C 3.400 units were bought at the standard unit cost. Valenzuela Plastics Inc. C 8. Indirect materials average P0. C 33. A 13. $2. C 17. P13. B 38. D 7. A 30. $64.000 Other overhead 600 Total P 33.000 Direct labor 24. D 11. D 30. D 34. A 22.82 D. D 29.875 units of Material E at standard cost and 875 units at a unit cost of P14.791.000 U. B 23. B MSQ-04 Page 12 . C 5. The fixed overhead budget variance for May was: A. A 39. P13. B 15. P13. B 22.050 units of Material D were used and 7. D 12. Based on normal capacity operations.25 F B. B 6.656. D 35. Questions 40 and 41 are based on the following information. D 37. P6. C 36.15 per direct labor hour.38. C 5. All Material D. The 1.400 units had a unit cost of P6. C 26. A 7. 20 days per month at a wage rate of P6 per hour. A 26. B. D 3.791. D 19. B 4. $6. B 33. D. In accordance with the standard two units of Material D and one unit of Material E should be used to make each unit of Product F. C 29. P2. B 32.

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