27. A.

Price, P4,500 unfavorable; Usage, P10,000 favorable

Management Advisory Services 28. C. P3,400
By Franklin Agamata 29. C. P3.45
30. D. P6,000 favorable
Chapter 07: Standard Costing and Variance 31. B. P17.76
Analysis 32.
33.
B. Favorable price variance, unfavorable usage variance.
A. P2.50
34. D. 23,000 units
Basic concepts
35. C. P12,500 unfavorable
1. B. Control costs
36. D. P12.25
2. C. Top management
37. C. P1,225 unfavorable
3. C. If properly used, standards can help motivate employees.
38. B. P388.50 favorable
4. B. Either job-order costing or process costing
39. C. P94.50 unfavorable
5. B. Theoretical
40. B. Actual quantity purchased by the difference between actual price and
6. D. Management recognizes the need to know why variances happen to be able to
standard price.
make corrective actions and fairly reward good performers.
41. A. Production manager only
7. D. Whether the variance is favorable or unfavorable.
41. A. Production and industrial engineering
8. A. Can exist because standard costs represent what costs should be whereas
42. D. Sales volume of the product
budgeted costs are expected actual costs.
43. D. The purchase of lower-than-standard-quality material
9. C. Engineering standards based on attainable performance.
44. B. Material usage variance.
10. D. Ideal standards can be used for cash budgeting or product costing.
45. A. Purchasing manager
11. B. A firm using practical standards has no reason to make any midyear
46. D. Yield variance and mix variance
adjustment to the production standard if an old machine is replaced by a newer,
faster machine.
Direct labor cost variances
12. D. Theoretical capacity
47. A. The mix of workers assigned to the particular job was heavily was heavily
13. C. Includes consideration of idle time caused by both limited sales orders and
shifted towards the use of higher paid experienced individuals.
human and equipment inefficiencies.
48. D. Labor rate
14. A. Flexible Budgeting, Yes; Standard Costing, Yes
49. B. Actual hours exceed standard hours
15. D. Determining price and usage variance allows management to evaluate the
50. D. 8,250
efficiency of the purchasing and production functions.
51. B. P20,700 unfavorable
16. C. The actual equivalent units are multiplied by the standard cost per unit.
52. B. P6,150 favorable
17. D. Information for use in controlling the cost of production.
53. A. P5.50
18. D. Production
54. D. Unfavorable materials usage variance
19. D. Materials Price Variance, Yes; Materials Usage Variance, Yes
55. D. Labor efficiency
20. D. Purchasing manager
56. A. Union contracts approved before the budgeting cycle
21. B. Materials are purchased
57. D. producing fewer units than originally planned
22. A. Price increases for raw materials
58. A. Total labor variance
23. D. A company’s president
59. D. Currently attainable
24. C. Closed to cost of goods sold in the period in which they arose.
60. D. Unfavorable direct labor price variance of P1,275
25. B. Allocated among work-in-process inventory, finished goods inventory, and
61. B. P1,200
cost of goods sold.
62. D. P8.05
26. A. Apportion the total only among work-in-process and finished goods
63. D. 2,200
inventories on hand at the end of the interim reporting period.
64. A. P30
65. A. P243,600
66. D. P96.00

Factory overhead cost variances

Materials cost variances
Management Advisory Services
67. A. Controllable (Budget) Variance, Yes; Volume Variance, Yes 108.B. The difference between flexible budget and actual sales volume, times master
68. D. BASH, No; FOH Applied to production, No budget unit contribution margin.
69. A. Net overhead variance
70. C. Volume Variance
71. A. P3,000 favorable
72. B. 121,000
73. D. 115,000
74. A. P76,000
75. B. P25,000 overapplied
76. B. P20,000 unfavorable
77. B. P10,000
78. A. P96,000 unfavorable
79. B. P188,500
80. C. P186,200
81. A. Overhead being substantially composed of fixed costs
82. B. Net overhead variance
83. A. Net factory overhead variance
84. B. Controllable (Budget) Variance, Yes; Volume Variance, No
85. D. Fixed factory overhead volume variance resulting from management decision
midway through the fiscal year to reduce its budgeted output by 20%
86. A. Overhead volume
87. B. Spending variance
88. C. Production volume variance
89. B. Price differences for factory overhead costs.
90. B. Unfavorable
91. D. BAAH, No; BASH, Yes
92. D. AFOH, Yes; BAAH, Yes
93. D. Overhead is composed only of variable costs.
94. D. Production volume variance
95. C. Spending variance, Unchanged; Volume variance, Increased
96. A. P195,000
97. C. P30,000
98. D. P12,000 unabsorbed
99. A. P3,000 favorable
100.A. P750 favorable
101.B. P20,425

Miscellaneous topics
102.D. Fixed factory overhead volume variance resulting from management decision
midway through the fiscal year to reduce its budgeted output by 20%
103.C. Sales quantity variance (final svv) and sales mix variance
104.A. Allocated among work-in-process inventory, finished goods, and cost of
goods sold
105.C. Variable
106.A. Simplify costing and expedite cost reports
107.B. P35,000 unfavorable