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Standard Costing Practice Questions

The document contains 4 practice questions related to standard costing. Question 1 asks to calculate material quantity and price variances given standard and actual rates paid for plastic pipes used to make lawn chairs. Question 2 asks to calculate material price variances assuming recording at time of purchase or issue. Question 3 asks for labor efficiency and rate variances given standard and actual direct labor hours and rates. Question 4 asks for a factory overhead variance analysis using two variance method given standard and actual overhead amounts and direct labor hours.

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mohammad Ali
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373 views3 pages

Standard Costing Practice Questions

The document contains 4 practice questions related to standard costing. Question 1 asks to calculate material quantity and price variances given standard and actual rates paid for plastic pipes used to make lawn chairs. Question 2 asks to calculate material price variances assuming recording at time of purchase or issue. Question 3 asks for labor efficiency and rate variances given standard and actual direct labor hours and rates. Question 4 asks for a factory overhead variance analysis using two variance method given standard and actual overhead amounts and direct labor hours.

Uploaded by

mohammad Ali
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Standard Costing

Practice Questions
Q. 1 The Relax Lawn Furniture Company manufacture lawn chairs for their customers. 12
meters of plastic pipe are required to produce one chair. Standard rate of plastic pipe is Rs. 0.80
per meter. During the month of March, 100,000 meters of pipe were purchased at the rate of Rs.
0.78 a meter. In the month of March, 7,200 plastic chairs were produced by using 87,300 meters
of pipe. The materials price variance is recognized at the time of purchase of materials as per
policy.

Required:
Calculate the materials quantity and price variance

Q.2 The standard price for material IBX Paint is Rs. 3.65 per liter. During the month of April
2,000 liters of were purchased at the rate of Rs. 3.60 per liter. Actual quantity used during April
was 1,775 liters. Standard quantity allowed for the month of April was 1,825 liters.

Required:
Calculate materials price, assuming that
a. It is recorded at the time of purchase.
b. It is recorded at the time of issue.

Q.3 The manufacturing process of Zee Ltd requires a standard of 0.80 direct labor hour per unit
for operation X-20 at a standard wage rate of Rs.6.75 per hour. The actual production of 2,000
units used 1,580 direct labor hours at a cost of Rs. 6.90 per hour.

Required:
The labor efficiency and rate variances of Zee Ltd.
Factory Overhead Variance Analysis
Q.4 The Osage Company uses a standard cost system. The factory overhead standard rate per
direct labor hour is:

Fixed Rs. 4500 Rs. 0.9 per hr


5,000 hrs

Variable Rs. 7,500 Rs. 1.5 per hr


5,000 hrs

Total rate 2.40 per hr

For April, actual factory overhead was 11,000, actual labor hours worked 4,400, and standard
hours allowed for actual production were 4,500.
Required:
Factory overhead variance analysis using the two variance method.

Q.5 The Devries Company has a budgeted normal capacity of 10,000 labor hours, with a
standard production of 8,000 units at this capacity.
Standard costs are:
Materials ------------------------------------------------------------2 kgs @ Rs. 0.50 per kg.
Labor ---------------------------------------------------------------Rs.9 per hour
The factory overhead standard rate per direct labor hour is:
Fixed ------------------------------------------------------ Rs. 0.50 per hour
Variable ---------------------------------------------------Rs. 1.50 per hour
Total ---------------------------- Rs. 2.00 per hour
During May, actual factory overhead totaled Rs. 17,550 and 9,000 labor hours cost Rs. 76,500.
During May 7,000 units were produced using 14,400 kgs of materials at a cost of Rs. 0.51 per
kg.
Required:
Two variance of materials, two variances of labor, and two variance of factory overhead.

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