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I. TRUE OR FALSE: Write the word True if the answer is correct, otherwise write the
word False. (1 pt each, 15 points)
_________ 2. The use of standard costs instead of actual costs increases the
complexity of product costing for inventory valuation.
_________ 4. Cost variances are the difference between the actual costs
incurred and the standard costs allowed for the budgeted units
produced.
_________ 5 If the materials inventory is carried at the standard cost per input
unit, then the materials price variance is the responsibility of the
purchasing department.
_________ 8. A large, favorable labor price variance can be offset with a large,
insignificant labor efficiency variance and then, treated as a
period cost.
_________ 10. If the debit to the Work in Process inventory account equals the
credit to payroll account, then the actual hours used equals the
standard hours allowed and the actual labor rate equals the
standard labor rate.
_________ 13. Fixed costs for the period are by definition a lump sum of costs
that remain unchanged and therefore the fixed overhead
spending variance is always zero.
TOTO Company purchased 40,000 units of Material A at a price of P2.60 per pound. The
standard price of Material A is P2.80 per pound. During the month, 28,000 pounds of
Material A were used, which was 4,000 pounds more than the standard allowed.
Required:
Mommy Corporation has a standard labor cost of P55 per unit of output. During the past
month, 1,500 units were manufactured. The total labor hours allowed for this output were
11,000 hours. The actual labor costs were P80,640. Actual labor hours were 11,300
Required:
Problem 3:
The materials purchase price was 2.80 centavos higher than the standard price of 50
centavos per unit.
Required:
Problem 4:
The Anti-RSI Company employs a standard costing system. Data for the month of
September include the following:
Required:
1. Your firm has just discovered that it has an unfavorable material usage (efficiency)
variance. What are some factors that may have caused this variance?