STRATEGIC COST (GFORMS ACTIVITY)
1. An entity achieved an actual labor rate per hour equal to the standard labor rate per hour. However,
actual hours utilized in production is 12,000 hours while the standard production hours are 10,000 hours.
From this information,
A. Labor rate variance is favorable.
B. Labor rate variance is unfavorable.
C. Labor efficiency variance is favorable.
D. Labor efficiency variance is unfavorable.
2. In the development of the entity’s standard metrics and data, the entity utilized in-house time and
motion studies. One employee who was observed in the actual production process was too nervous to be
watched working by the higher management, thereby presented a slower way of doing his work than usual.
The hours worked during this observation was recorded by the management and was used as the standard.
During variance analysis, this may lead to…
A. A favorable material quantity variance.
B. An unfavorable material quantity variance.
C. A favorable labor efficiency variance.
D. An unfavorable labor efficiency variance.
3. After an entity developed production standards, the entity decided to purchase cheaper but low-
quality materials. Because of that, more products required additional material units due to rework which
also contributed to additional time spent in manufacturing. In this scenario, the variance analysis would
probably present
A. Unfavorable material quantity variance and unfavorable labor efficiency variance
B. Favorable material price variance, unfavorable material quantity variance, and unfavorable labor
efficiency variance
C. Favorable material price variance, unfavorable material quantity variance, and favorable labor
efficiency variance
D. Unfavorable material quantity variance and favorable labor efficiency variance
4.
A. Only Hannah is correct.
B. Only Therese is correct.
C. Both Hannah and Therese are correct.
STRATEGIC COST (GFORMS ACTIVITY)
D. Both Hannah and Therese are incorrect.
5.
A. Only Judy is correct.
B. Only Gabriel is correct.
C. Both Judy and Gabriel are correct.
D. Both Judy and Gabriel are incorrect.
6.
A. Only Jeremy is correct.
B. Only Marinelle is correct.
C. Both Jeremy and Marinelle are correct.
D. Both Jeremy and Marinelle are incorrect.
7. The variance most useful in evaluating plant utilization is the
A. Fixed overhead volume variance
B. Fixed overhead spending variance
C. Variable overhead spending variance
D. Variable overhead efficiency variance
8. When evaluating the operating performance management sometimes uses the difference between expected
and actual performance. This refers to…
A. Management by Deviation
B. Management by Objective
C. Management by Exception
STRATEGIC COST (GFORMS ACTIVITY)
D. Management by Control
9. If the actual quantity of direct materials used in producing a commodity differs from the standard quantity,
the variance is termed
A. controllable variance
B. quantity variance
C. price variance
D. rate variance
10. In a standard cost system, Work in Process Inventory is ordinarily debited with
A. actual costs of material and labor and a predetermined overhead cost for overhead
B. standard costs based on the level of input activity (such as direct labor hours worked).
C. actual costs of material, labor, and overhead.
D. standard costs based on production output.
11. Persechino Corporation is developing standards for its products. One product requires an input that is
purchased for P82.00 per kilogram from the supplier. By paying cash, the company gets a discount of 2%
off this purchase price. Shipping costs from the supplier's warehouse amount to P6.55 per kilogram.
Receiving costs are P0.47 per kilogram. The standard price per kilogram of this input should be…
12. Lion Company's direct labor costs for the month of January were as follows:
Actual total direct labor-hours 20,000
Standard total direct labor-hours 21,000
Direct labor rate variance—unfavorable P3,000
Total direct labor cost P126,000
What was Lion's direct labor efficiency variance?
13. What is the material quantity variance?*
14.
What is the labor rate variance?*
STRATEGIC COST (GFORMS ACTIVITY)
15.
What is the volume overhead variance?*
16.
17. The predetermined overhead rate for Weed-B-Gone is P8, comprised of a variable overhead rate of P5 and
a fixed rate of P3. The amount of budgeted overhead costs at normal capacity of P240,000 was divided by
normal capacity of 30,000 direct labor hours, to arrive at the predetermined overhead rate of P8. Actual
overhead for June was P15,800 variable and P9,100 fixed, and standard hours allowed for the product
produced in June was 3,000 hours. The total overhead variance is…
18. Darf Company applies overhead on the basis of direct labor hours. Two direct labor hours are required for
each product unit. Planned production for the period was set at 9,000 units. Manufacturing overhead is
budgeted at P135,000 for the period, of which 20% of this cost is fixed. The 17,200 hours worked during
the period resulted in production of 8,500 units. Variable manufacturing overhead cost incurred was
P108,500 and fixed manufacturing overhead cost was P28,000. Darf Company uses a four variance
method for analyzing manufacturing overhead. The variable overhead spending variance for the period is…
19. Queen Inc. produces BaekHong cologne that has gone viral in social media. The company established the
following standards for 1 kilo of BaekHong Cologne:
Materials price variance is _________________
STRATEGIC COST (GFORMS ACTIVITY)
20. Using the above, compute the materials mix variance
21. Using the above, compute the materials yield variance
22.
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