Session 4 Answers
Session 4 Answers
Session 4 Answers
1. What is the budgeted variable overhead cost rate per output unit?
a. P48.40
b. P32.25
c. P11.00
d. P10.75
5. What is the budgeted sales-mix percentage for the Standard and the Super vacuum cleaners, respectively?
a. 0.70 and 0.30
MANAGEMENT SERVICES
SESSION #4: Standard Costing and Variance Analysis
b. 0.80 and 0.20
c. 0.20 and 0.80
d. 0.30 and 0.70
Standard Super
Budgeted units sales 3,200 800
÷ Total budgeted units 4,000 4,000
Sales-mix % 0.80 0.20
7. What is the total sales quantity variance in terms of the contribution margin?
a. P278,000 favorable
b. P110,000 favorable
c. P448,000 favorable
d. P170,000 favorable
8. What is the total sales mix variance in terms of the contribution margin?
a. P448,000 favorable
b. P278,000 favorable
c. P170,000 favorable
d. P110,000 favorable
Standard Super
Actual units sales 3,500 1,500
÷ Total budgeted units 5,000 5,000
Sales-mix % 0.70 0.30
During May, Tin purchased 160,000 pounds of direct material at a total cost of P304,000. The total factory wages for
May were P42,000, 90 percent of which were for direct labor. Tin manufactured P19,000 units of product during May
using 142,500 pounds of direct materials and 5,000 direct labor hours.
14. GB Castings is a job order shop that uses a full absorption, standard cost system to account for its production
costs. The overhead costs are applied on a direct labor hour basis. A production volume variance will exist for
GB in a month where
a. Production volume differs from sales volume
b. There is a budget variance in fixed factory overhead costs
c. Actual direct labor hours differ from standard allowed direct labor hours
d. The fixed factory overhead applied on the basis of standard allowed direct labor hours differs from the
budgeted fixed factory overhead
15. Which of the following is not an advantage of using a standard cost system?
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SESSION #4: Standard Costing and Variance Analysis
a. Helps management control costs
b. Eliminates the needs for analysis of variances
c. Requires analysis of all aspects of operations
d. Facilitates establishing an effective system of responsibility accounting
17. The L Company has a standard costing system. The following data are available for September:
i. Actual quantity of direct materials purchased: 25,000 lbs.
ii. Standard price of direct materials: P2 per pound
iii. Materials price variance: P2,500 unfavorable
18. The V Company uses a standard costing. The following data are available for October:
i. Actual quantity of direct materials used: 23,500 lbs.
ii. Standard price of direct materials: P2 per pound
iii. Materials quantity variance: P1,000 favorable
21. Which of the following is least likely to be involved in establishing standard costs for evaluation purposes?
a. Top management
b. Industrial engineers
c. Quality control personnel
d. Budgetary accountants
22. A difference between standard costs used for cost control and budgeted costs
a. Cannot exist because they should be the same amounts.
b. Can exist because standard costs must be determined after the budget is completed.
c. Can exist because budgeted costs are historical costs, whereas standard costs are based on engineering
studies.
d. Can exist because standard costs represent what costs should be, whereas budgeted costs represent
expected actual costs.
23. A manufacturing firm planned to manufacture and sell 100,000 units of product during the year at a variable cost
per unit of P4 and a fixed cost per unit of P2. The firm fell short of its goal and only manufactured 80,000 units at
a total incurred cost of P515,000. The firm’s manufacturing cost variance is
a. P5,000 unfavorable
b. P5,000 favorable
c. P35,000 unfavorable
d. P85,000 favorable
Actual 515,000
Budgeted [(80,000 x 4) + (100,000 x 2)] 520,000
Total VOH variance 5,000 F
24. Which one of the following statements about ideal standards is incorrect?
a. Ideal standards can be used for cash budgeting or product costing.
b. Ideal standards are also called theoretical or maximum-efficiency standards.
c. Ideal standards make no allowance for waste, spoilage, and machine breakdowns.
d. Ideal standards do not make provisions for workers with different degrees of experience and skill levels.
25. In a standard cost system, the investigation of an unfavorable material usage variance should begin with the
a. Plant controller only
b. Production manager only
c. Purchasing manager only
d. Production manager or the purchasing manager