Instructions

MULTIPLE CHOICE:
1. Which of the following statements concerning standard costs is false?

a. If properly used, standards can help motivate employees.
b. All variances, whether favorable or unfavorable, should be investigated.
c. Standard costs should be attainable under conditions of efficient
operation.
d. A standard cost system may be used with a process costing system or a
job order costing system.
2. Standard costing is used to isolate the variances between standards costs and
actual costs. It allows management to measure performance and correct
inefficiencies, thereby helping to
a. Allocate costs accurately.
b. Determine the break-even point.
c. Control costs.
d. Eliminate management’s need for subjective decisions.
3. Both standard costs and budgeted costs are used for controlling costs. However,
the two terms are not the same. Standard costs differ from budgeted costs in the
standard costs
a. Are based on the engineering studies while budgeted costs are historical
costs.
b. Costs that were incurred for actual production, while budgeted costs are
costs that should have been incurred for such production.
c. Are costs that should have been incurred for actual production, while
budgeted costs are costs that should be incurred for budgeted or planned
production.
d. Are always expressed in total amounts, while budgeted costs are always
expressed in per-unit amounts.
4. The difference between actual costs and standard cost is called

a. Favorable variance c. variance
b. Unfavorable variance d. variable
5. Which of the following statements is correct?

a. A standard costs system can never be used in both the job order and
process costing systems.
b. Standard costing can be used in job order costing, but not in process
costing system.
c. Standard costing can be used in either the job order costing system or
process costing system.
d. A standard cost system can be used in process costing system, but not in
job order costing system.
6. In a process costing system, equivalent units of production are computed to

determine the number of complete units that could have been produced, given no
beginning and ending work-in-process inventories. If a company uses standard
costing in its process costing system, the equivalent units of production
a. Are multiplied by the standard cost per unit to compute the total standard
cost of units produced.
b. Are never used.
c. Are converted to standard equivalent unites and then multiplied by the
actual cost per unit.
d. Are assumed to be zero.
7. A variance shows a deviation of actual results from standard or budgeted results.

In deciding whether to investigate a variance or not, management may consider
the following factors, except
a. The amount of the variance and the cost of investigation.
b. Whether the variance is favorable or unfavorable.
c. The possibility that investigation will eliminate future occurrences of the
variance.
d. The trend of the variances over time.
8. The following describe ideal standards, except

a. Currently attainable standards.
b. Theoretical or maximum efficiency standards.
c. Make no allowances for waste, machine downtime, and spoilage.
d. Perfection standards.
9. Which of the following does not describe practical standards?

a. Currently attainable standards.
b. Can be used for product costing and cash budgeting.
c. Performance that is reasonably expected to be achieved with an
allowance for normal spoilage, waste, and downtime.
d. Negate the need to adjust standards if working conditions change
10. A standard cost is an estimate of what a cost should be under normal operation
conditions. In establishing standard costs, the following organizational personnel
may be involved, except
a. Top management c. quality control personnel
b. Budgetary accountants d. industrial engineers.
11. Because of the impact of fixed costs in most businesses, standard costing
system is usually not effective unless the company also has a flexible budgeting
system. In flexible budgeting,
a. Standard costs are used to prepare budgets for multiple activity levels.
b. Standard costs are never used.
c. Variable costs and fixed costs show the same behavior as budgets for
different activity levels are prepared.
d. A budget for the expected activity level is prepare showing variable and
fixed costs separately.
12. In a standard costing system, actual costs are compared with standard costs.
The difference or variance is determined, and responsibility for such variance is
assigned or identified to a particular person or department, in order to
a. Determine who is at fault and render the appropriate punishment.
b. Be able to set the correct selling price of the product.
c. Use the knowledge about the variances to promote learning and
continuous improvement in the manufacturing operations.
d. Trace the variances to the proper inventory accounts so that they may be
valued at actual costs.
13. This management practice involves giving significant attention only to those
areas in which material variances from expectations occur, that is, giving less
attention on areas operation as expected.
a. Responsibility Accounting c. management by exception
b. Management by objectives d. materials control
14. The materials efficiency variance is the difference between actual and standard
quantities used in production, multiplied by the standard price. This variance may
be the responsibility of
a. Purchasing department c. production department
b. Sales department d. personnel department
15. An unfavorable materials spending variance coupled with a favorable materials
efficiency variance would most likely result from
a. The purchase and use of lower than standard quality materials
b. The purchase and use of higher than standard quality materials
c. Problems involving machine efficiency
d. Changes in product mix
16. For a recent month, the accountant’s standard cost variance analysis report
showed a significant amount of unfavorable materials efficiency (quantity or
usage) variance that warrants and investigation. The investigation of this
variance should begin with the
a. Personnel manager
b. Purchasing manager only
c. Production manager only.
d. Production manager or purchasing manager
17. In two-way variance analysis, materials, labor, and variable overhead variances
may be broken down into
a. Price variance and spending variance
b. Quantity or time variance and efficiency variance
c. Spending variance and efficiency variance
d. Spending variance and volume or capacity variance
18. The difference between the actual time used and the amount of time that should
have been used for actual production, multiplied by the standard labor rate per
time is called
a. Efficiency variance
b. Price variance
c. Spending variance
d. Rate variance
19. The difference between the actual price or rate paid and the standard price or
rate that should have been paid, multiplied by the actual quantity or actual time is
called
a. Efficiency variance
b. Quantity variance
c. Time variance
d. Spending variance
ITEMS 20 TO 25 ARE BASED ON THE FOLLOWING INFORMATION:
A company produces a product with the following standard costs:
Materials, 2 pieces @ P5 per piece P10

Labor 4 hours @ P8 per hour 32
Variable Overhead 4 hours @ P6 per hour 24
Fixed overhead* 4 hours @ P4 per hour 16
Total Standard manufacturing cost per unit P82
*based on capacity level of 5,000 units

20. If a flexible budget for 4,500 units, 5,000 units, and 5,500 units is prepared for a
certain month, the budgeted costs are
4,500units 5,000units 5,500units
a. 369,000 410,000 451,000

b. 297,000 330,000 363,000
c. 377,000 410,000 443,000
d. 0 410,000 0
21. Assume that X is the number of units to be produced and TBC is the total
budgeted cost, the flexible budget formula that the company may use to compute
total budgeted cost for any value of X within the relevant range is
a. TBC = 82x
b. TBC = 66x
c. TBC = 80,000
d. TBC = 66x + 80,000
22. Assume that during the month, the company actually produced 4,800 units and
incurred actual total manufacturing costs of P400,000, how much is the flexible
budget for the actual production?
a. P400,000
b. 396,800
c. 393,600
d. 316,800
23. How much is the flexible budget variance for the month?
a. 3,200 unfavorable
b. 6,400 unfavorable
c. 10,000 favorable
d. 83,200 unfavorable
24. How much is the total standard cost that should have been incurred for the
actual production of 4,800 units?
a. 396,800
b. 400,000
c. 393,600
d. 316,800
25. How much is the total standard cost variance?
c. 10,000 favorable
ITEMS 26 TO 28 ARE BASED ON THE FOLLWING INFORMATION:
During July, a company’s direct materials costs for the production of Product X were as
follows:
Standard unit price P12.50

Standard quantity allowed for actual production 6,300 units
Actual unit purchase price P13
Quantity purchased and used for actual production 6,900 units
26. The total materials cost variance is

a. P89,700 unfavorable
b. P78,750 favorable
c. P10,950 favorable
d. P10,950 unfavorable
27. The materials efficiency or usage variance is
b. P7,500 unfavorable
c. P3,450 unfavorable
d. P7,500 favorable
28. The materials spending variance or price variance is
b. P 3,450 favorable
ITEMS 29 AND 30 ARE BASED ON THE FOLLOWING INFORMATION
E. Bernardo Corporation produces a product called “Earnest”. It uses a standard costing

system and values its stock at standard cost. The standard cost of raw materials in
product Earnest is:
4 kilos of material Y at P10 per kilo =P40 per unit of Earnest
During May, the company purchased 14,200 kilos of Y at a cost of P170,200 or P12 per
kilo. It produced 3,000 units of M using 12,600 kilos of Y.
29. What was the raw materials price variance for Material Y?
30. Which of the following is not correct?
a. The total materials cost variance is P31,200 unfavorable
b. The standard materials cost of the units produced is P120,000
c. The actual cost of materials used in production is P170,400
d. The materials efficiency is P6,000 adverse.
31. The materials mix variance for a product is P450 unfavorable and the materials
yield variance is P150 unfavorable. This means that
a. The materials price variance is P600 unfavorable
b. The materials quantity variance is P600 unfavorable
c. The total materials cost variance is definitely P600 unfavorable
d. The materials price variance is also unfavorable, but the amount cannot
be determined from the given information
32. Information on Chiong Companys materials cost for October 200A is as follows
Actual Cost of direct materials P126,000

Actual quantity of direct materials purchased and used 45,000 pieces
Standard quantity of direct materials
allowed for October production 43,500 pieces
Direct materials efficiency variance P4,500 unfavorable
For the month of October, what was Chiong’s direct materials spending
variance?
b. P4,200 favorable
c. P9,000 favorable
ITEMS 33 AND 34 ARE BASED ON THE FOLLOWING INFORMATION
Maninang Company installs pre-fabricated stairs on residential houses. The standard

materials cost for a low-cost house is P15,000 based on 2 units at a cost of P7,500
each. During May, Maninang Company installed stairs on 30 low-cost housing using 62
units at a cost of P7,450 or P461,900.
33. Maninang Company’s materials price variance is

b. P3,100 favorable
d. P15,000 favorable
34. Maninang Company’s materials usage variance is
b. 3,000 favorable
c. 15,000 favorable
35. Delilah Company produces “one-sizes-fits-all” rubber gloves and uses standard
costing to account for its costs. Each unit ( a pair ) of finished product contains
0.50 meters of direct materials. However, a 20% direct material spoilage
calculated on input quantities occurs during the production process. The cost of
direct materials is P10 per meter.
How much is the standard direct materials cost per unit of the finished product?
a. 6.25
b. 4.00
c. 16
d. 5
Samson Company uses a standard costing system in the production of its only product.
The 84,000 units of raw materials inventory were purchased for P126,000 and 4 units of
raw materials are required to produce one unit of final product. In October, the company
produced 14,400 units of product. The standard cost allowed for materials was
P72,000, and there was an unfavorable usage variance of P3,000.
36. Samson Company’s standard price for one unit of materials is

a. 1.25
b. 1.50
c. 2.50
d. 3.00
37. The units of materials used to produce the October output totaled
a. 57,600
b. 18,000
c. 60,000
d. 55,200
38. The materials price variance for the units used in October was
b. 15,000 favorable
c. 3,000 unfavorable
d. 3,000 favorable
A manufacturer of portable DVD players buys components from subcontractors for

assembly into complete DVD players. Each player requires 6 units of Part A, which has
a standard cost of P100 per unit. During May, the company’s records showed the
following with respect to Part A:
Purchases 15,000 units

Purchase Price P110 per unit
Units of players produced 2,000
Units of Part A used in production 12,400
39. For the month of May, the company’s materials purchase price variance is
b. 40,000 favorable
d. 150,000 favorable
40. During May, the company incurred materials usage variance of
b. 40,000 favorable
d. 150,000 favorable
41. The amount that will be shown on a flexible budget for Part A usage during the
month of May is
a. 1,200,000 unfavorable
b. 1,200,000
c. 1,320,000
d. 200,000
Calzada Company produces Four-Season Drinks by mixing juices of four fruits in

season. The standard costs and input for a 50-liter batch of the juice are as follows:
Fruits Standard Input Standard Cost Per Total Standard Cost

Quantity in Liters Liter
Santol 20 P10.00 P200.00
Mango 10 21.25 212.50
Pineapple 25 7.50 187.50
Tamarine 5 15.00 75.00
Total 60 P675.00
The quantities purchased and used during the current month are shown below. A total
14 batches were produced during the month.
Fruits Quantity Purchased Purchase Price Quantity Used

(Liters) (Liters)
Santol 300 P9.50 290
Mango 150 22.00 130
Pineapple 350 7.20 350
Tamarind 80 15.40 75
Total 1,450 775
42. How much is the total materials cost variance?

a. 452 unfavorable
b. 160 favorable
43. The materials purchase price variance is
a. 110.50 favorable
b. 122.50 favorable
c. 160.00 unfavorable
44. The materials usage price variance is
a. 110.50 favorable
b. 122.50 favorable
c. 93.75 favorable
d. 56.25 unfavorable
45. The market mix variance is
a. 160.00 favorable
b. 122.50 favorable
d. 93.75 favorable
46. The materials yield variance is
a. 160.00 favorable
b. 122.50 favorable
c. 93.75 favorable
47. The materials quantity variance is equal to
a. The yield variance
b. The total of materials mix and yield variances
c. The total of the price, mix, and yield variances
d. The mix variance
ITEMS 48 AND 49 ARE BASED ON THE FOLLOWING INFORMATION:
Aristeo Company produced 3,200 units of product. Each unit requires 2 standard hours.
The standard labor rate is P15 per hour. Actual direct labor for the period was P79,200
(6,600 hours x P12)/
48. What is the direct labor time variance?

a. 19,800 favorable
b. 16,800favorable
49. What is the direct labor rate variance?
a. 19,800 favorable
b. 16,800 favorable
Dagalangit Company uses a standard cost system. The following information pertains to
direct labor for Product A for the month of March:
Standard rate per hour P12.00

Standard hours allowed for actual production 3,000 hours
Actual rate per hour P12.60
Labor efficiency variance – unfavorable P2,400
50. What were the actual hours worked?

a. 3,200
b. 2,800
c. 3,000
d. 3,190
51. What is the standard time required for each unit of product?
a. 3,000
b. 3,200
c. 200
d. Cannot be determined from the given information
Information on Zamora Company’s direct labor costs for the month of February is as
follows:
Total direct labor payroll P193,200

Favorable direct labor efficiency variance 2,560
Actual direct labor hours 27,600
Difference between actual time and standard time 400 hours
52. what is the company’s direct labor rate variance?

b. 16,800 favorable
d. 13,800 favorable
53. What is the company’s total direct labor cost variance?
b. 2,560 favorable
d. 400 favorable
54. For the month of June, M. Garcia Company’s records disclosed the following
data relating to direct labor:
Actual Cost P25,000
Spending variance 2,500 favorable
Efficiency variance 3,750 unfavorable
Standard cost P23,750
The actual direct labor hours used during June was 5,000 hours. How much was
the company’s standard direct labor rate per hour?
a. P5.00
b. P4.50
c. P5.50
d. P4.75
55. J. Valencia Company’s direct labor costs for the month of October were as
follows:
Standard rate per hour P25.20
Standard direct labor hours 84,000 hours
Actual direct labor hours 80,000 hours
Direct labor rate variance P67,200 favorable
What was J. Valencia Company’s total direct labor payroll for the month of
October?
a. P1,952,000
b. P2,080,000
c. P1,948,800
d. P2,083,200
Charis Corporation produces a single product with a standard direct labor cost of 4
hours @ P12 per hour. During May, 1,000 units were produced using 4,100 hours @
P12.20 per hour.
56. The direct labor efficiency variance is

b. P400 unfavorable
c. P420 unfavorable
57. The total labor cost variance is
b. P820 unfavorable
c. P2,020 favorable
ITEM 58 TO 60 ARE BASED ON THE FOLLOWING INFORMATION:
A major activity at the Professional Regulation Commission is the processing of

application forms for the Board Examinations of the various professions under its
control. To analyze and control the costs incurred in the Applications Department, the
PRC’s accountant previously prepared the following budgeted data for the year 200A:
Normal number of applications processed per year 150,000

Budgeted variable costs of processing the 150,000 applications P10,500,000
Fixed cost per year 2,500,000
Number of hours per 100 applications processed 200 hours
Wage rate per 100 applications P6,000
During the year 200A, the department processed a total of 120,000 applications using
250,000 hours. The cost incurred were:
Total costs P11,140,000
Labor costs 7,500,000
58. For 200A, the application Department’s total cost to process the 120,000
applications assuming standard performance should be
a. P13,000,000
b. P10,900,000
c. P10,500,000
d. P8,400,000
59. The total labor cost variance for 200A is
b. 300,000 favorable
c. 1,200,000 unfavorable
d. 1,860,000 favorable
60. The total direct labor cost variance may be broken down into:
Spending Variance Efficiency Variance
a. 1,200,000 unfavorable 10,000 unfavorable
b. 1,860,000 unfavorable 300,000 unfavorable
c. 300,000 unfavorable P0
d. P0 300,000 unfavorable
The accountant of Trinidad Company prepared the following cost analysis report on
direct labor costs for the jobs completed during the previous months:
Job Actual Hours at Actual Hours at Standard Hours at

Actual Rate Standard Rates Standard Rates
105 P2,270 2,590 2,170

110 10,740 10,970 10,500
117 4,730 4,900 4,620
120 13,850 13,600 13,480
Totals 31,590 32,060 30,770
61. What is the total flexible budget direct labor variance for the jobs completed?
a. 470 favorable
b. 820 unfavorable
d. 32,060
62. What is the labor rate variance?
a. 470 favorable
b. 820 unfavorable
d. 32,060
63. What is the labor time variance?
a. 470 favorable
b. 820 unfavorable
d. 32,060
64. Edward V. Company’s record show the following data pertaining to one of its
products:
Actual production 1,800 units
Standard labor hours allowed per unit 2 hours
Standard labor rate per hour P6
Actual hours worked 3,690 hours
Labor rate variance P740 unfavorable
Labor efficiency variance 540 unfavorable
What was the actual labor cost?

a. 21,600
b. 1,280
c. 22,140
d. 22,880
Johanna Corporation had the following flexible budget figures for the month of April:
Materials (1,000 units at P15 per unit) P15,000
Direct Labor (1,000 units at 45 minutes per unit) 75,000
During April, actual data are as follows:

Actual production 850 units
Materials costs P12,750
Direct labor 57,375
65. The materials cost variance is

a. P0
c. P2,250 favorable
d. P12,750
66. The total direct labor cost variance is
a. 17,625 favorable
b. 31,350 favorable
c. 6,375 favorable
d. 11,250 favorable
67. The direct labor cost variance is
a. P0
b. Composed of time variance and rate variance
c. Composed of time variance only
d. Composed of rate variance only
Asnawie Company’s factory workers who have a direct hand in manufacturing its
products are grouped into three (3) classes – Classes A, B, and C. For the first quarter
of 200A, the standard labor rates and standard time allowed for actual production were:
Class Standard Labor Standard Labor Total Standard

Hours Allowed for Rate per Hour Labor Cost
Production
A 300 hours P12.00 P3,600
B 400 10.50 4,200
C 500 7.50 3,750
Totals 1,200 hours P11,550
At the beginning of the quarter, a new wage law took effect, increasing the wage rates
by an average of 20%. The standard wage rates were not revised.
During the period, the company paid the following wage rates for the actual hours used:
Class Actual Rates Actual Hours Total Actual Labor
Cost
A P14.40 350 5,040
B 12.60 380 4,788
C 9.00 520 4,680
Totals 1,250 14,508
68. What is the total labor cost variance?

69. What is the labor rate variance?
70. What is the total labor time variance?
71. The labor mix variance is
72. The labor yield variance is
a. 481.25 unfavorable
b. 58.75 unfavorable
c. 540 unfavorable
73. Which of the following statements if correct?
a. The production manager should be held responsible for the unfavorable
rate variance.
b. The labor time variance may be further analyzed by breaking it down into
labor mix and yield variances.
c. The personnel manager should be held responsible for the unfavorable
rate variance.
d. The labor mixed yield variance analysis is applicable only to material
costs.
74. The following direct labor information pertains to the production of Product A:
Standard time per unit 4 direct labor hours

Number of direct factory workers 40 workers
Number of productive hour per month, per worker 240 hours
Monthly wages per worker P8,400
Worker’s benefit treated as direct labor cost 10% of wages
How much is the standard direct labor cost per unit of Product A?
a. 38.50
b. 140.00
c. 154.00
d. 3.85
The following information pertains to Biscocho Company’s production of one unit of

Product A:
Quantity Price Cost Per Unit
Materials – standard 7.5 kgs. P0.30/kg P2.25/unit
Labor – standard 0.6 hr. 10.00/hr 6.00/unit
During the period, the company produced 15,000 units of Product A. It purchased
140,000 kgs of materials at P0.25 per kilo. It incurred direct labor cost of P90,780 at
P10.20 per labor hour used. At the end of the period, the company’s inventory of
materials increased by 25,000 kgs.
The company recognizes the materials price variance when materials are purchased.
75. How much was the company’s materials price variance?

b. 5,750 favorable
d. 7,000 favorable
76. What was the company’s materials efficiency variance?
a. 750 unfavorable
b. 1,000 favorable
c. 2,500 favorable
d. 625 unfavorable
77. The company’s labor efficiency variance during the period was
a. 1,020 favorable
b. 100 favorable
c. 1,000 favorable
d. 780 unfavorable
78. The direct labor spending variance for the period was
d. 1,000 favorable
79. The total prime cost variance is
a. 5,000 favorable
b. 780 unfavorable
c. 5,780 favorable
d. 4,220 favorable
80. The total factory overhead variance is
a. The difference between the actual factory overhead costs incurred and the
standard factory overhead costs allowed for the actual production
b. The sum of the actual factory overhead costs incurred and the standard
factory overhead costs allowed for the actual production.
c. The difference between the actual fixed overhead costs incurred and the
standard fixed overhead costs allowed for the actual production.
d. The difference between the actual variable factory overhead costs
incurred and the standard variable overhead costs allowed for the actual
production.
81. One way of analyzing the variable factory overhead variance is by breaking it
down into
a. variable overhead spending and efficiency variance

b. variable overhead spending and rate variances
c. variable overhead efficiency and time variances
d. actual and standard overhead cost
82. One way if analyzing the fixed factory overhead variances is by breaking it down
into
a. fixed overhead spending and volume variances

b. fixed overhead spending or volume variances
c. fixed overhead spending and budget variances
d. fixed overhead volume and capacity variances
83. Variable overhead is applied on the basis of standard direct labor hours. If, for a
given period, the direct labor efficiency variance is favorable, the variable
overhead efficiency variance will be
a. a. favorable c. zero
b. b. unfavorable d. the same amount as the labor
efficiency variance
84. If factory overhead is applied on the basis of output, the variable factory
overhead efficiency variance will be
a. equal to the direct labor efficiency variance

b. unfavorable, if actual production is less than the budgeted production
c. favorable, if actual production is greater than budgeted production
d. zero
85. Under the two-way variance analysis (two variance method) for factory overhead,
the difference between the actual factory overhead cost incurred and the factory
overhead applied to actual production is called
a. a. volume variance c. efficiency variance

b. b. controllable variance d. total or net overhead variance
86. Under the two-variance method for analyzing factory overhead, which of the
following variances are composed of both variable and fixed overhead elements?
a. controllable or budget variance only

b. Volume or capacity or variance only
c. Both controllable and volume variances
d. Neither controllable nor volume variances
87. Under the two variance method for analyzing factory overhead, controllable or
budget variance is computed by subtracting from actual factory overhead costs
incurred the
a. budget allowance based on actual hours

b. budget allowance based on standard hours
c. budget allowance based on normal hours
d. budget allowance based on budgeted hours
88. Under the three variance method for analyzing factory overhead, the budget or
spending variance is the difference between the actual factory overhead costs
incurred and the
a. budget allowance based on actual input
b. budget allowance based on actual output
c. budget allowance based on standard input
d. budget allowance based on standard output
89. Fredenita Company uses two variance method for analyzing its factory overhead
costs. It allocates factory overhead based on 100% of practical capacity. Almost
always, unfavorable variances are reported. For the coming period, Fredenita
Company’s management is planning to change the denominator level for
allocating factory overhead- from 100% to 80%. If this change were effected,
which of the following variances would be affected?
a. Controllable Volume
b. NO NO
c. YES YES
d. NO YES
e. YES NO
90. The standard fixed factory overhead rate is computed based on a selected
denominator level, i.e., a predetermined activity level. If the standard hours
allowed for actual production is equal to this predetermined activity level for a
given period, the volume variance will be
a. a. favorable c. zero
b. b. unfavorable d. impossible to
compute
91. Which of the following standard cost variances would be least controllable by a
production supervisor?
a. a. Material efficiency c. Variable overhead

efficiency
b. b. Labor efficiency d. Overhead volume
92. Larcy Corporation uses a full- absorption standard costing system in accounting
for its production costs. The factory overhead costs are applied based on direct
labor hours.
a. Larcy Corporation’s choice of a production volume or capacity level as a
denominator for calculating its factory overhead rate will affect
b. The fixed factory overhead budget variance

c. The variable overhead application rate
d. The fixed overhead application rate
e. The total amount of budgeted fixed overhead cost
93. Bulsky Corporation will have an overhead volume variance during a period if
a. its production exceeds sales

b. its actual production is not equal to the predetermined activity level
c. actual fixed overhead cost is not equal to its budgeted fixed overhead cost
d. its actual hours work is not equal to the standard hours allowed for good
output
94. The amount of fixed factory overhead that RRR Corporation will apply to actual
production is the
a. actual production times the standard time allowed per unit time the
standard fixed overhead application rate.
b. actual production times the actual time allowed per unit
c. actual production times the actual time allowed per unit times the actual
fixed overhead application rate
d. actual production times the standard time allowed per unit times the actual
fixed overhead application rate.
e. ITEMS 95 TO 99 ARE BASED ON THE FOLLOWING INFORMATION:
f. Doc Corporation has a standard absorption and flexible budgeting system.

Information about the factory overhead cost for X Corporation’s February
production activity follows:
g. Standard variable overhead rate per direct labor hour
P24
h. Stand fixed overhead rate per direct labor hour
12
i. Total factory overhead application rate
P36
j. Standard direct labor hours allowed for actual production

6,000 hours
k. Budgeted fixed factory overhead cost
P75, 000
l. Actual total factory overhead cost incurred
P220, 000
m. The actual fixed overhead cost incurred was in agreement with the
budget. The company uses two variance method for analyzing factory
overhead cost variances.
95. The net factory overhead variance is

a. a. P4, 000 unfavorable c. P1, 000
unfavorable
b. b. P.3, 000 unfavorable d. P0
96. If the total overhead variance is broken down into variable and fixed variances,
the amounts are:
Variable OH Variance Fixed OH Variance
a. P3, 000 unfavorable P1, 000 unfavorable
b. 1,000 unfavorable 3,000 unfavorable
c. 4,000 unfavorable 0
d. 0 4,000 unfavorable
97. The controllable variance amounts to

a. a. P0 c. P1, 000
unfavorable
b. b. P4, 000 unfavorable d. P3, 000
unfavorable
98. The volume variance amounts to

a. a. P0 c. P1, 000
unfavorable
unfavorable
99. The fixed overhead spending or budget variance is

a. a. P0 c. P1, 000
unfavorable
unfavorable
100. Abegael Corporation has total over applied overhead of P5, 000.
Additional information is as follows:
Variable OH Fixed OH TOTAL
Applied based on standard
Direct labor hours allowed P33, 600 P24, 000
P57, 600
Budgeted based on standard
Direct labor hours allowed 30,400 21,600
52,000
What is the actual total overhead?

a. P62,600 c. P57, 600
b. P52, 600 d. P47, 000
Villaberde Corporation’s standard cost system contains the following

overhead costs, computed based on a monthly normal volume of 25, 000
units or 50, 000 direct labor hours:
Variable Factory Overhead P12

per unit
Fixed Factory Overhead 8
per unit
Total
P20
The following info pertains to the month of April 200A:
Actual FOH cost incurred:

Variable P316, 680
Fixed 225,000
Actual Production 26,000 units
Actual Direct labor hours worked 54,600 hours
101. The total FOH cost variance is
a. P25,000 unfavorable c. P21,680

unfavorable
b. P17,000 unfavorable d. P4, 680
unfavorable
102. The variable overhead variance amounts to

unfavorable
unfavorable
103. The variable overhead spending variance is

a. P16, 680 unfavorable c. P10, 920
favorable
b. P4, 680 unfavorable d. P12, 000
unfavorable
104. The variable overhead efficiency variance is

unfavorable
b. P10,920 favorable d. 12, 000
unfavorable
105. The fixed overhead variance amounts to

a. P25,000 unfavorable c. P8, 000
unfavorable
unfavorable
106. The fixed overhead budget or spending variance amounts to

a. P0 c. P17, 000
unfavorable
unfavorable
107. The fixed overhead volume or capacity variance amounts to
a. P8, 000 unfavorable c. P25,000
unfavorable
favorable
108. Using the two variance method, the controllable variance is

unfavorable
unfavorable
109. Under the two variance method, the controllable variance consist of
a. Variance spending, variable efficiency, and fixed spending variances

b. Variable spending, variable efficiency and volume variances
c. Variable spending, variable efficiency and fixed efficiency variances
d. Variable cost variances only
110. Using the three variance method for analyzing FOH variance, the budget
or spending variance amounts to
a. P4, 680 unfavorable c. P25, 000 unfavorable
b. P14,080 unfavorable d. P13, 680 unfavorable
111. Using the three variance method for analyzing FOH, the budget or
spending variance consist of the
a. Fixed budget or spending variance only

b. Variable variances and fixed spending variance
c. Variable spending and fixed spending variances
d. Difference between the budgeted FOH based on normal activity level and
actual total FOH
112. Under the three variance method for FOH analysis, the efficiency variance
is
a. The variable efficiency variance of P15,000 unfavorable

b. The variable efficiency variance of P15, 600 unfavorable and volume
variance of P8, 000 favorable
c. Equal to P8, 000 favorable
d. Never computed
Gamboa Corporation uses a predetermined FOH rate based on direct labor

hours. For the month of November, the following are the budgeted and actual
data for Gamboa Corporation:
Budgeted FOH (base on budgeted volume of

50, 000 direct labor hours) P150,
000
Actual FOH (for actual DLH of 55,000 hrs.) 162,500
113. If the FOH is applied to direct labor hours, how much was the over applied
or under applied FOH?
a. P2, 500 over applied c. P12,500 over applied
b. P2, 500 under applied d. P12,500 under applied
114. If the actual FOH was in agreement with the budgeted FOH, the variable
OH rate per hour and the total fixed FOH rate were
Variable rate per hour Total Fixed OH

a. P2.50 P25,000
b. 3.00 150,000
c. 3.00 162,500
d. 0.50 25, 000
115. Aguisanda Corporation uses a predetermined FOH application rate based

on the direct labor cost. For the year ended December 31, 200A, some budgeted
and actual data are as follows:
Actual Budgeted
FOH P310, 000 P300, 000
Direct Labor Cost 210, 000 200,000
Direct Labor hours 26, 000 25,000
For 200A, Aguisanda Corp.’s over applied or under applied FOH was?
a. P5000 under applied c. P10000 under applied
b. P5000 over applied d. P10000 over applied
116. Cliff John Corp. uses a flexible budget system and prepared the ff.
information for 200A:
Percent of Capacity 80%
100%
DL Hours 24,000
30,000
Variable FOH 48,000
60,000
Fixed FOH 108,000
108,000
Total FOH rate per DL hour 6.50 5.60
Cliff John Corp operated at 80% of capacity during 200A, but applied FOH
base on the 90% capacity level.
If the actual FOH was equal to the budgeted amount for the attained capacity,
how much was OH variance for the year?
a. P21600 under applied c. P12000 under applied

b. P24000 over applied d. P 6000 over applied
Following are the data about Ganaba Corp.’s fixed and variable OH for the
month of May:
Actual Flexible Budget Applied

Fixed OH P120, 000 ? P125,
000
Variable OH 80,000 90,000
?
Variable OH rate variance P2000 U

Volume Variance P5000 F
Standard Variance OH rate per hour P20
117. How efficient or inefficient is Ganaba Corp. in terms of using direct labor
hours as an activity base?
a. 600 hours efficient c. 400 hours efficient

b. 600 hours inefficient d. 400 hours inefficient
118. What was the total budgeted fixed FOH?

a. P115, 000 c. 125, 000
b. 130,000 d. 120, 000
119. How much is the fixed FOH spending variance?
a. P0 c. P120, 000
b. P5, 000 d. cannot be determined from the given
info.
120. The fixed OH efficiency variance is
a. P5, 000 favorable c. P10, 000 favorable

b. P5, 000 unfavorable d. never a meaningful variance
Fabrigar Corp. produces a product that is distributed all over the country.
The corporation uses a standard costing system and applies factory overhead
based on planned machine hours using a predetermined annual rate.
For the year 2008, the following planned figures were made available:
2008 budgeted data

Fixed FOH P 960,000
Variable FOH 1, 920, 000
DL hours 38,400
Machine hours 192, 000
During January 2008, the company incurred fixed FOH cost of P80, 960 and
variable FOH cost of P 171, 200. Data regarding labor and machine hours for
the month are as follows:
Actual Budgeted based on actual production

DL Hours 3,360 3,200
Machine hours 17,280 16,800
121. The predetermined FOH application rates are

Variable FOH Fixed FOH
a. P50.00 P25.00
b. P10.20 P4.80
c. P10.00 P5.00
d. P9.90 P4.69
122. The total amount of FOH applied to production for January was
a. P252, 000 c. P48, 000

b. P259, 000 d. P252, 160
123. The amount of over applied or under applied FOH for January was
a. 7040 over applied c.252000 applied

b. 3200 under applied d.160 under applied
124. The fixed FOH spending variance for January was
a. P960 favorable c.P4,000 favorable

b. P960 unfavorable d P4, 000 unfavorable
125. The fixed OH volume variance in January was
a. P960 favorable c.P4,000 favorable

b. P960 unfavorable d P4, 000 unfavorable
126. The FOH controllable variance for January was
a. P4160 unfavorable c.P3200 unfavorable

b. P4160 favorable d P4000 favorable
127. The variable FOH variance for January was
a. P4160 favorable c.P3200 favorable

b. P4000 favorable d P3200 unfavorable

Flodarose Apparel, Inc. produces housedresses of one quality. The
housedresses are produced in batches to fill each special order from its
customers, mostly stall owners in malls located in various cities.
Flodarose sews the customer’s labels on the housedresses. The standard

costs for a dozen housedresses are:
Material 24 meters @ P55 P1,

320
Labor 3 hours @ P245
P 735
Factory Overhead 3 hours @ P200
P600
Standard cost per dozen
P2, 655
During Dec. 200A, Flodarose worked on three orders, for which, the job cost
sheets show the following:
Units in Batch material used Hours Worked

Batch (Dozen) (Meter)
A 100 2,140 298
B 170 4,044 513
C 120 2,882 289
Actual data pertaining to December production:
Actual quantity of material purchased 9,500 m.

Purchase of cost of materials P532, 000
Materials price variance is recognized when materials are purchased.

All inventories are carried at standard cost.
Actual DL cost during December P275,

000
Actual labor time used in production 1,100 hours
Actual factory overhead cost incurred in December P228, 000
Budgeted Data- FOH

Total budgeted FOH for year 200A based
On the plant’s normal capacity of 4, 800 dozen
Of housedresses annually P2,
880, 000
40% of the total budgeted FOH is fixed

Flordarose applies FOH to production on the basis of the DL hours
Work in Process
There was no work in process at Dec. 1

As of Dec. 31, only Batch C was still in process, which was 80% complete as
to direct labor
128. The standard cost of production for the month of December 200A is
a. P1,035,450 c. P971, 730

b. P1,003,410 d. P716, 850
129. The materials purchase price variance for December was
a. P8, 016 unfavorable c. P17,200

unfavorable
unfavorable
130. The net materials quantity variance is
a. 24 favorable c. 552 unfavorable

b. 1,320 favorable d. 164 favorable
131. The total labor efficiency variance in hours is
a. 70 favorable c. 490 unfavorable

b. 17,150 favorable d. 402 unfavorable
132. The total labor rate variance in pesos is
a. P5, 500 unfavorable c. P5, 990

unfavorable
b. P1, 100 unfavorable d. P 490
unfavorable
133. The controllable FOH variance for December was
a. P240 unfavorable c. P3, 880

unfavorable
b. P240 favorable d. P96, 240
unfavorable
134. The total non- controllable (volume) FOH variance for December was
a. P240 unfavorable c. P8, 400

unfavorable
unfavorable
Alago and Company, CPAs, prepares income tax returns (ITR) for individual
taxpayers. The company uses the weighted average method and actual costs
for financial reporting purposes. However for internal reporting, Alago uses
the FIFO method and a standard cost system. The standards, based on
equivalent performance have been established as follows:
Standard Time per ITR Rate per hour Cost per ITR
Labor cost 5 hours P100
P500
Overhead 5 hours 50
250
For March 200A, budgeted overhead is P245, 000
Additional information for March performance:
In-process data:
ITRs in process, March 1 (25% complete) 100
ITRs started in March 800
ITRs in process, March 31 (80% complete) 200
Actual costs:
ITRs in process, March 1: Labor P30,000
Overhead 12,500
Labor, month of March 4,000 hours 344,960
Overhead, month of March 224, 860
135. The equivalent units of performance for labor and overhead using the
weighted average method is
a. 860 c. 740
b. 835 d. 700
136. The actual cost per equivalent units are
Labor Overhead
a. P401 P262
b. 436 276
c. 417 264
d. 538 339
137. The actual cost of ITRs in process at March 31, is
a. P42, 500 c. P113, 920

b. P53, 400 d. P142, 400
138. How much is the standard cost per ITR?
a. P150 c. P712
b. P750 d. P765
139. The equivalent units for current production under the FIFO method is
a. 885 c. 860
b. 600 d. 835
140. What was the labor rate variance in March?
a. P72, 540 favorable c. P17,500 favorable

b. P85, 040 favorable d. P55, 040 favorable
141. How much was the labor time variance in March?
a. P72, 540 favorable c. P17,500 favorable

b. P85, 040 favorable d. P55, 040 favorable
142. What was the total FOH cost variance?
a. P32, 250 unfavorable c. P20, 140 favorable

b. P16, 110 unfavorable d. P 7, 640 favorable
143. What was the total OH budget variance?
a. P32, 250 unfavorable c. P20, 140 favorable

b. P16, 110 unfavorable d. P 7, 640 favorable
144. What was the company’s volume variance in units?
a. 180 under absorbed c. 280 under absorbed

b. 60 under absorbed d. 145 under absorbed
S. Fortunato Soap Inc. uses a standard cost system in its Powder soap division. The
standard cost of manufacturing one sack of Sabong Pulbos is as follows:
Materials 48 kilos @ 75 per kilo P3, 600

Labor 4 hours @ P40 per hour P160
Factory Overhead P50 per direct labor hour P200
Total standard cost per sack P3, 960
The budgeted fixed FOH is P14, 400 for a normal monthly production of 180 sacks of
Sabong Pulbos. During the month, S. Fortunato Soap produced 160 sacks of Sabong
Pulbos. The actual cost were:
Material purchased and used- 7, 700 kilos at P562, 100

P73 per kilo
Labor- 650 hours at P38 per hour 24,700
FOH: Fixed 14,400

Variable 20, 800
Total actual cost P622, 000
145. The materials cost variances are:

Spending Efficiency
a. P15,400 F P1, 500 U
b. P1, 500 U P15, 400 F
c. P15, 360 F P1, 460 U
d. P 1, 460 U P15, 360 F
146. The labor cost variances are:
Spending Efficiency
a. P 400 U P1, 300 F
b. P1, 300 F P400 U
c. P400 U P900 F
d. P 1, 280 F P380 U
147. The factory overhead cost variances are:
Controllable Volume
a. P3, 200 U P1, 000 U
b. P1, 600 F P1,600 F
c. P1,600 U P1, 600 U
d. P0 P3, 200 U

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MULTIPLE CHOICE:

1. Which of the following statements concerning standard costs is false?

4. The difference between actual costs and standard cost is called

5. Which of the following statements is correct?

6. In a process costing system, equivalent units of production are computed to

7. A variance shows a deviation of actual results from standard or budgeted results.

8. The following describe ideal standards, except

9. Which of the following does not describe practical standards?

ITEMS 20 TO 25 ARE BASED ON THE FOLLOWING INFORMATION:

A company produces a product with the following standard costs:

Materials, 2 pieces @ P5 per piece P10

*based on capacity level of 5,000 units

4,500units 5,000units 5,500units

a. 369,000 410,000 451,000

Standard unit price P12.50

26. The total materials cost variance is

ITEMS 29 AND 30 ARE BASED ON THE FOLLOWING INFORMATION

E. Bernardo Corporation produces a product called “Earnest”. It uses a standard costing

Actual Cost of direct materials P126,000

ITEMS 33 AND 34 ARE BASED ON THE FOLLOWING INFORMATION

Maninang Company installs pre-fabricated stairs on residential houses. The standard

33. Maninang Company’s materials price variance is

ITEMS 36 TO 38 ARE BASED ON THE FOLLOWING INFORMATION:

36. Samson Company’s standard price for one unit of materials is

ITEMS 39 TO 41 ARE BASED ON THE FOLLOWING INFORMATION:

A manufacturer of portable DVD players buys components from subcontractors for

Purchases 15,000 units

ITEMS 42 TO 47 ARE BASED ON THE FOLLOWING INFORMATION:

Calzada Company produces Four-Season Drinks by mixing juices of four fruits in

Fruits Standard Input Standard Cost Per Total Standard Cost

Fruits Quantity Purchased Purchase Price Quantity Used

42. How much is the total materials cost variance?

ITEMS 48 AND 49 ARE BASED ON THE FOLLOWING INFORMATION:

48. What is the direct labor time variance?

Standard rate per hour P12.00

50. What were the actual hours worked?

ITEMS 52 AND 53 ARE BASED ON THE FOLLOWING INFORMATION:

Total direct labor payroll P193,200

52. what is the company’s direct labor rate variance?

ITEMS 56 AND 57 ARE BASED ON THE FOLLOWING INFORMATION:

56. The direct labor efficiency variance is

A major activity at the Professional Regulation Commission is the processing of

Normal number of applications processed per year 150,000

Job Actual Hours at Actual Hours at Standard Hours at

105 P2,270 2,590 2,170

What was the actual labor cost?

During April, actual data are as follows:

65. The materials cost variance is

ITEMS 68 TO 73 ARE BASED ON THE FOLLOWING INFORMATION:

Class Standard Labor Standard Labor Total Standard

68. What is the total labor cost variance?

Standard time per unit 4 direct labor hours

ITEMS 75 TO 79 ARE BASED ON THE FOLLOWING INFORMATION:

The following information pertains to Biscocho Company’s production of one unit of

75. How much was the company’s materials price variance?

a. variable overhead spending and efficiency variance

a. fixed overhead spending and volume variances

a. equal to the direct labor efficiency variance

a. a. volume variance c. efficiency variance

a. controllable or budget variance only

a. budget allowance based on actual hours

a. a. Material efficiency c. Variable overhead

b. The fixed factory overhead budget variance

a. its production exceeds sales