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Part 1: Multiple Choices – Answer the following questions and place the letter of your answer on the space provided. Use
capital letters only. Solutions are not required. All forms of erasing, altering or tampering of your answers or the answer
sheet will render your answers void. God bless!
1. Interstate Merchandising anticipated selling 29,000 units of a major product and paying sales commissions of P6 per unit. Actual
sales and sales commissions totaled 31,500 units and P182,700, respectively. If the company used a static budget for
performance evaluations, Interstate would report a cost variance of:
A. P6,300 F. C. P8,700 F.
B. P6,300 U. D. P8,700 U.
2. With respect to overhead, what is the difference between normal costing and standard costing?
A. The choice of an activity measure.
B. Use of a predetermined overhead rate.
C. Use of standard hours versus actual hours.
D. Use of a standard rate versus an actual rate.
3. Assume that it takes 15 minutes of labor time to crush enough garlic to fill one container of yogurt. Because the smell of the garlic
can be unbearable, workers are given (and they take it!) 10 minutes of break time every hour (i.e., 50 minutes of work, 10 minutes
of break). How many minutes should Stench use as a standard quantity of labor time per container of yogurt?
A. 16.2 C. 17.5
B. 17.0 D. 18.0
4. Solo Corporation recently purchased 25,000 gallons of direct material at P5.60 per gallon. Usage by the end of the period
amounted to 23,000 gallons. If the standard cost is P6.00 per gallon and the company believes in computing variances at the
earliest point possible, the direct-material price variance would be calculated as:
A. P9,200 F. C. P10,000 F
B. P9,200 U. D. P10,000 U.
5. Virgil Corp. uses a standard cost system. In May, Virgil purchased and used 17,500 pounds of materials at a cost of P70,000.
The materials usage variance was P2,500 unfavorable and the standard materials allowed for May production was 17,000
pounds. What was the materials price variance for May?
A. P15,000 favorable. C. P17,500 favorable.
B. P15,000 unfavorable. D. P17,500 unfavorable.
6. Lucky Corporation's purchasing manager obtained a special price on an aluminum alloy from a new supplier, resulting in a direct-
material price variance of P9,500 F. The alloy produced more waste than normal, as evidenced by a direct-material quantity
variance of P2,000U, and was also difficult to use. This slowed worker efficiency, generating a P2,500U labor efficiency variance.
To help remedy the situation, the production manager used senior line employees, which gave rise to a P900U labor rate
variance. If overall product quality did not suffer, what variance amount is best used in judging the appropriateness of the
purchasing manager's decision to acquire substandard material?
A. P4,100 F. C. P7,500 F.
B. P5,000 F. D. P9,500 F.
7. Robert Company, which applies overhead to production on the basis of machine hours, reported the following data for the period
just ended:
Actual units produced: 12,000
Actual variable overhead incurred: P77,700
Actual machine hours worked: 18,800
Standard variable overhead cost per machine hour: P4.50
If Robert estimates 1.5 hours to manufacture a completed unit, the company's variable-overhead spending variance is:
A. P3,600 favorable. C. P6,900 favorable.
B. P3,600 unfavorable. D. P6,900 unfavorable.
8. Suski Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard
machine-hours (MHs). The company has provided the following data for the most recent month:
Budgeted level of activity 7,400 MHs
Actual level of activity 7,500 MHs
Cost formula for variable overhead cost per MH P5.90
Budgeted fixed overhead cost P60,000
Actual total variable overhead P42,750
Actual total fixed overhead P61,000
What was the variable overhead spending variance for the month?
A. P590 unfavorable C. P1,000 unfavorable
B. P910 favorable D. P1,500 favorable
9. Martin Company, which applies overhead to production on the basis of machine hours, reported the following data for the period
just ended:
Actual units produced: 9,000
Actual variable overhead incurred: P54,400
Actual machine hours worked: 16,000
Standard variable overhead cost per machine hour: P3.50
If Martin estimates two hours to manufacture a completed unit, the company's variable-overhead efficiency variance is:
A. P1,600 favorable. C. P7,000 favorable.
B. P1,600 unfavorable. D. P7,000 unfavorable.
10. Ferro Enterprises, Inc., uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of
standard direct labor-hours. During the month of September, the company applied P52,000 in fixed manufacturing overhead cost
to units of product. At the end of the month, manufacturing overhead was over-applied by P3,000. If there was no volume
variance in September, then the budgeted fixed manufacturing overhead cost for the month was:
A. P49,000 C. P55,000
B. P52,000 D. P58,000
11. Tropiano Electronics Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis
of standard machine-hours (MHs). The company had budgeted its fixed manufacturing overhead cost at P62,100 for the month
and its level of activity at 3,200 MHs. The actual total fixed manufacturing overhead was P61,600 for the month and the actual
level of activity was 3,000 MHs.
What was the fixed overhead budget variance for the month to the nearest peso?
A. P500 favorable C. P3,381 favorable
B. P500 unfavorable D. P3,381 unfavorable
12. Enberg Company, which applies overhead to production on the basis of machine hours, reported the following data for the period
just ended:
Actual units produced: 14,800
Actual fixed overhead incurred: P791,000
Standard fixed overhead rate: P13 per hour
Budgeted fixed overhead: P780,000
Planned level of machine-hour activity: 60,000
If Enberg estimates four hours to manufacture a completed unit, the company's fixed-overhead volume variance would be:
A. P10,400 favorable. C. P11,000 favorable,
B. P10,400 unfavorable. D. P11,000 unfavorable.
13. When considering whether to investigate a variance, managers should consider all of the following except the variance's:
A. size.
B. trends over time.
C. pattern of recurrence.
D. nature, namely, whether it is favorable or unfavorable.
14. Rowe Corporation reported the following variances for the period just ended:
Variable-overhead spending variance: P50,000 U
Variable-overhead efficiency variance: P28,000 U
Fixed-overhead budget variance: P70,000 U
Fixed-overhead volume variance: P30,000 U
If Rowe desires to analyze variances that arose primarily from managers' expenditures in excess of anticipated amounts, the
company should focus on variances that total:
A. P50,000 U. C. P120,000 U.
B. P70,000 U. D. P178,000 U.
20. The variance resulting from obtaining an output different from the one expected on the basis of input is the:
A. efficiency variance C. usage variance
B. mix variance D. yield variance
Part 2 – Modified Alternate Response Type: Write PRETORIA if both statements are true, CAPETOWN if both statements are
false, BLOEMFONTEIN if only the first statement is true and JOHANNESBURG if only the second statement is true.
28. The average time between start of production of one unit and start of the production of its second unit
a. cycle time b. takt time
Part 3 – Problem Solving – Place your answers on a separate yellow sheet of paper. Emphasize your final answers.
SecondYearIsWavingAtYou Corp. produces a product using the following standard proportions and costs of material for a production of
50 units:
Pounds Cost per Amount
Pound
Material A 50 P5.00 P250.00
Material B 40 P6.00 P240.00
Material C 60 P3.00 P180.00
150 P4.4667 P670.00
Standard shrinkage (33 1/3%) 50
Net weight and cost 100 P6.70 P670.00
Required: Compute the material cost variance and analyze it further using two-way approach. Further analyze the efficiency variance to
make it a three-way variance analysis approach. Round answers to the nearest peso.
ANSWERS:
PART 1 PART 2
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