Institute of Business and Accountancy

ACT23 – Strategic Cost Management R.A.A. Hipolito, CPA

STANDARD COST AND VARIANCE ANALYSIS QUIZZER

1. Gem Company uses a standard cost system. Information for raw materials for Product G for the month
of November is as follows:
Standard unit price P1.60
Actual purchase price P1.55
Actual quantity purchased 2,000 units
Standard quantity allowed for actual production 1,800 units
What is the material purchase variance?
a. P90 favorable c. P100 favorable
b. P90 unfavorable d. P100 unfavorable

2. Egay Corporation uses a standard cost system. Direct labor information for Product E for the month of
October is as follows:
Standard unit price P6.10 per hour
Actual rate paid P6.00 per hour
Standard quantity allowed for actual production 1,500 hours
Labor efficiency variance P600 unfavorable
What is the actual hours worked?
a. 1,400 b. 1,402 c. 1,598 d. 1,600

3. Nice Inc. uses a standard cost system. Overhead cost information for Product A for the month of May is
as follows:
Total actual overhead incurred P 12,600
Fixed overhead budgeted P 3,300
Total standards overhead rate per direct labor P 4.00
Variable overhead rate per direct labor hour P 3.00
Standard hours allocated for actual production 3,500
What is the overall (or net) overhead variance?
a. P1,200 favorable c. P1,400 favorable
b. P1,200 unfavorable d. P1,400 unfavorable

Items 4 and 5 are based on the following information.

Edil Company’s budgeted fixed factory overhead cost is P50,000 per month plus a variable overhead rate
of P4 per direct labor hour. The standard direct labor hours allowed for October production was 18,000.
An analysis of the factory overhead indicates that in October, Edil had an unfavourable budget
(controllable) variance of P1,000 and a favourable volume variance of P500. Edil uses a two-way analysis
of overhead variance.

4. The actual factory overhead measured in October is:

a. P121,000 b. P122,000 c. P122,300 d. P123,000

5. The applied factory overhead in October is:

a. P121,000 b. P122,000 c. P122,500 d. P123,000

6. The following information is available from the Olenny Company:

Actual factory overhead P 15,000
Fixed overhead expenses, actual P 7,200
Fixed overhead expenses, budgeted P 7,000
Actual hours 3,500
Standard hours 3,800
Variable overhead rate per direct labor hour P 2.50
Assuming that Olenny uses a three-way analysis of overhead variances, what is the spending variance?
a. P750 favorable c. P550 favorable
b. P750 unfavorable d. P1,500 unfavorable

ACT23_AY2223_S1_Handout No. 12 1|4

 Institute of Business and Accountancy
ACT23 – Strategic Cost Management R.A.A. Hipolito, CPA
Items 7, 8 and 9 are based on the following information.
The data below relate to the month of April 2020 for Tim, Inc. which uses a standard cost system:
Actual direct labor cost P 43,400
Actual hours used 14,000
Standard hours allowed for good output 15,000
Direct labor rate variance – debit P 1,400
Actual total overhead P 32,000
Budgeted fixed cost P 9,000
Normal activity in hours 12,000
Total application rate per standard direct-labor hour P 2.25
Tim uses a two-way analysis of overhead variance (controllable and volume).
7. What was Tim’s direct labor usage (efficiency) variance for April 2020?
a. P3,000 favorable c. P3,200 favorable
b. P3,000 unfavorable d. P3,200 unfavorable

8. What was Tim’s budget (controllable) variance for April 2020?

a. P500 favorable c. P2,250 favorable
b. P500 unfavorable d. P2,250 unfavorable

9. What was Tim’s volume variance for April 2020?

a. P500 favorable c. P2,250 favorable
b. P500 unfavorable d. P2,250 unfavorable

Items 10 through 12 are based on the following information:

The following information relates to a given department of Mervi Company for the first quarter of 2020:
Actual total overhead (fixed plus variable) P178,500
Budget formula:
Total FOH Cost = P100,000 + P0.50/hour
Total overhead application rate P1.50 per hour
Spending variance (from three-way analysis) P8,000 unfavorable
Volume variance (from two-way analysis) P5,000 favorable

10. What were the actual hours worked in this department during the quarter?
a. 110,000 b. 121,000 c. 137,000 d. 153,000

11. What were the standard hours allowed for good output in this department?
a. 105,000 b. 106,667 c. 110,000 d. 115,000

12. Each unit takes five hours to manufacture and the selling price is P4.50 per unit. Based on the overhead
budget formula, how many units must be sold to generate P30,000 more than total budgeted overhead
costs?
a. 27,500 b. 35,000 c. 55,000 d. 70,000

13. Grace Company manufactures tables with glass tops. The standard material cost for the glass used per
Type-R table is P7.80 based on six square-feet of vinyl at a cost of P1.30 per square-foot. A production
run of 1,000 tables in January 2020 resulted to usage of 6,400 square-feet of vinyl at a cost of P1.20 per
square-foot, a total of P7,680. The usage variance resulting from the above production run was:
a. 120 favorable c. 520 unfavorable
b. 480 unfavorable d. 640 favorable

14. X’tine Company has a standard absorption and flexible budgeting system and uses two-way analysis for
overhead variances. Selected data for the February 2020 production activity is as follows:
Budgeted fixed factory overhead costs P 64,000
Actual factory overhead incurred P 230,000
Variable factory overhead rate per direct labor hour P 5
Standard direct labor hours 32,000
Actual direct labor hours 33,000
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 Institute of Business and Accountancy
ACT23 – Strategic Cost Management R.A.A. Hipolito, CPA
The budget (controllable) variance for February 2020 is
a. 1,000 favorable c. 6,000 favorable
b. 1,000 unfavorable d. 6,000 unfavorable

15. Jae Company’s direct labor costs for the month of January 2020 were as follows:
Actual direct labor hours 20,000
Standard-direct labor hours 21,000
Direct labor rate variance, unfavorable P 3,000
Total payroll P 126,000
What was Jae’s direct labor efficiency variance?
a. P6,000 favorable c. P6,450 favorable
b. P6,150 favorable d. P6,300 favorable

16. Roy Corporation’s direct labor costs for the month of March 2020 were as follows:
Actual direct labor hours 40,000
Standard-direct labor hours 42,000
Direct labor rate variance, favorable P 8,400
Standard direct labor rate per hour P 6.50
What was Roy’s direct labor payroll for the month of March 2020?
a. P243,000 b. P244,000 c. P251,600 d. P260,000

17. Shirl Company install solar panels on residential houses. The standard material cost for a Type-S house
is P1,250 based on 1,000 units at a cost of P1.25 each. During April 2020, Shirl installed solar panels on
20 Type-S houses, using 22,000 units of materials at a cost of P1.20 per unit, and a total cost of P26,400.
Shirl’s materials price variance is:
a. P1,000 favorable c. P1,400 unfavorable
b. P1,100 favorable d. P2,500 unfavorable

18. Information of Reng Company’s overhead costs for the January 2020 production activity is as follows:
Budgeted fixed overhead P 75,000
Standard fixed overhead rate per direct labor hour P 3
Standard variable overhead rate per direct labor hour P 6
Standard direct labor hours allowed for actual production 24,000
Actual total overhead incurred P 220,000

Reng has a standard absorption and flexible budgeting system, and uses the two-variance method (two-
way analysis) for overhead variances. The volume (denominator) variance for January 2020 is:
a. P3,000 unfavorable c. P4,000 unfavorable
b. P3,000 favorable d. P4,000 favorable

19. Information on Aicel Company’s direct material costs is as follows:

Actual units of direct materials used 20,000
Actual direct materials costs P 40,000
Standard price per unit of direct materials P 2.10
Direct materials efficiency variance, favorable 3,000
What was Aicel’s direct material price variance?
a. P1,000 favorable c. P2,000 favorable
b. P1,000 unfavorable d. P2,000 unfavorable

20. Information on Jho Company’s overhead costs is as follows:

Standard applied overhead P 80,000
Budgeted overhead based on standard direct labor hours allowed 84,000
Budgeted overhead based on actual direct labor hours allowed 83,000
Actual overhead 86,000
What is the total overhead variance?
a. P2,000 unfavorable c. P4,000 favorable
b. P3,000 favorable d. P6,000 unfavorable
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 Institute of Business and Accountancy
ACT23 – Strategic Cost Management R.A.A. Hipolito, CPA
21. Information on Yhan Company’s direct labor is as follows:
Standard direct labor rate P3.75
Actual direct labor rate P3.50
Standard direct labor hours 10,000
Direct labor usage (efficiency) variance, unfavorable P4,200
What were the actual total hours worked (rounded to the nearest hour)?
a. 10,714 b. 11,120 c. 11,200 d. 11,194

22. Information on Ruby’s Company’s 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, favorable P240
What was the actual purchase price per unit, rounded to the nearest centavo?
a. P3.06 b. P3.11 c. P3.45 d. P3.75

23. Information on Del Company’s overhead costs is as follows:

Actual variable overhead P 73,000
Actual fixed overhead P 17,000
Standard hours allowed for actual production 32,000
Standard variable overhead rate per direct labor hour P2.50
Standard fixed overhead rate per direct labor hour P0.50

What is the total overhead variance?

a. P1,000 unfavorable c. P6,000 unfavorable
b. P6,000 favorable d. P7,000 favorable

24. The flexible budget for the month of May 2020 was for 9,000 units with direct material at P15 per unit.
Direct labor was budgeted at 45 minutes per unit for a total of P81,000. Actual output for the month
was 8,500 units with P127,500 in direct material and P77,775 in direct labor expense. Direct labor hours
of 6,375 were actually worked during the month. Variance analysis of the performance for the month of
May would show a(n)
a. favorable material quantity variance of P7,500
b. unfavorable direct labor efficiency variance of P1,275
c. unfavorable material quantity variance of P7,500
d. unfavorable direct labor rate variance of P1,275

25. Universal Company uses a standard cost system and prepared the following budget at normal capacity
for January
Direct labor hours 24,000
Variable factory overhead P48,000
Fixed factory overhead P108,000
Total factory overhead per direct labor hour P6.50
Actual data for January were as follows:
Direct labor hours worked 22,000
Total factory overhead P147,000
Standard direct labor hours allowed for capacity attained 21,000
Using the two-way analysis of overhead variance, what is the controllable variance for January?
a. P3,000 favorable c. P9,000 favorable
b. P5,000 favorable d. P10,500 unfavorable

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