1. Which of the following statements about d.

External Failure Costs

Theory of Constraints (TOC) is correct? 6. JIT purchasing can be used by
a. TOC is based on the idea that every a. Retailers
organization has at least one constraint that b. Wholesalers
prevents it from getting more of its c. Manufacturers
objectives. d. All of the above
b. TOC maintains that effectively managing 7. A characteristic of TQM is
the constraint is a key to success. a. Education and self-improvement
c. Under TOC, improvement efforts should be b. Quality by final inspection
focused on the constraints. c. Management by objectives
d. All of the above d. On the Job training by other workers
2. Process re-engineering 8. It refers to the difference between what the
a. Is less likely to result in employee resistance customer receives and what the customer gives
than total quality management up when buying a product or service
b. Is more likely to result in employee a. Margin
resistance than total quality management b. Profit
c. Does not affect employees, hence, no c. Customer value
resistance from employees is expected d. Benefit
when it is applied. 9. Per the TOC, improvement efforts should be
d. Affects employees in a way that boosts focused on the
their morale. a. Non-constraint work centers
3. Which of the following is among the benefits of b. Work center that incurs the highest costs
adopting a JIT system? c. Cost center where most workers are senior
a. Reduction in the number of deliveries of citizens
materials d. Work center that is the constraint
b. Increase in the number of suppliers 10. An innovative manufacturing company does not
c. Performance of non-value added activities a. Respond to the changing business
d. Maximization of standard delivery quality environment
4. TQM is an integrated system that identifies b. Emphasize on continuous improvement
customers (internal and external) and c. Strive to improve customer satisfaction
establishes their requirements. Accordingly, the through product quality
external, or ultimate customer, is best served d. Emphasize on existing product
when internal customers are also well served. In 11. A standard cost is an estimate of what a cost
view of this, the primary purpose for adopting should be under normal operating conditions.
TQM is to In establishing standard costs, the following
a. Achieve greater employee satisfaction organizational personnel may be involved
b. Achieve greater customer satisfaction except
c. Reduce delivery time a. Top management
d. Reduce delivery charges b. Budgetary accountants
5. Which of the four quality costs would be the c. Quality control Personnel
most damaging to a company’s ability to build a d. Industrial engineers
reputation as a world class manufacturer of 12. The following describe ideal standards, except
quality products a. Currently attainable standards
a. Prevention Costs b. Theoretical or maximum-efficiency
b. Appraisal Costs standards
c. Internal Failure Costs
 c. Make no allowance for waste, machine worker
downtime, and spoilage Workers’ benefits 20% of wages
d. Perfection standards treated as direct labor
13. Variance analysis should be used costs
What is the standard direct labor cost per unit
a. As the only source of information for
of product Glu?
performance evaluation
A. P30
b. To understand why variances arises
B. P24
c. To encourage employees to focus on
C. P15
meeting standards
D. P12
d. To administer appropriate disciplinary
17. A quantity of a particular raw material was
action to employees that do not meet
purchased for P43,250. The standard cost of the
standards
material was P2.00 per kilogram and there was
14. Standard costing is used to isolate the variances
an unfavorable materials price variance of
between standard costs and actual costs. It
P3,250. How many kilograms were purchased?
allows management to measure performance
A. 20,000
and correct inefficiencies, thereby helping to
B. 21,625
a. Allocate costs accurately
C. 23,250
b. Determine the break-even point
D. 24,875
c. Control costs
18. The direct labor standards for a particular
d. Eliminate management’s need for
product are:
subjective decisions
4 hours of direct labor @ P12.00 per direct
15. In a standard costing system, actual costs are
labor-hour = P48.00
compared with standard costs. The difference
During October, 3,350 units of this product
or variance is determined, and responsibility for
were made, which was 150 units less than
such variance is assigned or identified to a
budgeted. The labor cost incurred was P159,786
particular person or department, in order to
and 13,450 direct labor-hours were worked.
a. Determine who is at fault and render the
The direct labor variances for the month were:
appropriate punishments
Labor Rate Variance Labor Efficiency Variance
b. Be able to set the correct selling price of the
product A. P1,614 U P600U
c. Use the knowledge about the variances to B. P1,614 U P600F
C. P1,614 F P600U
promote learning and continuous
D. P1,614 F P600F
improvement in the manufacturing
operations
19. Anne had a P750 unfavorable direct labor rate
d. Trace the variances to the proper at
variance and an P800 favorable efficiency
inventory accounts so that they may be
variance. Anne paid P7,150 for 800 hours of
valued
labor. What was the standard direct labor wage
16. The following direct labor information pertains
rate?
to the manufacture of product Glu:
A. P8.94
Time required to make 2 direct labor-hours
B. P7.94
one unit
Number of direct labor 50 workers C. P8.00
workers D. P7.80
Number of productive 40 hours 20. Assume that 7 ounces of pecans are included in
hours per week, per each bowling ball fruitcake. Because Holiday
worker wants only the best pecans in its fruitcakes, the
Weekly wages per P500 pecans they buy are inspected and some are
 discarded as unacceptable for fruitcake Actual direct labor hours 440,000
production. The loss rate is expected to be 1 Actual variable overhead P 352,000
ounce of pecans for every 5 ounces inspected. Actual fixed overhead P 575,000
Under traditional standard costing, how many Kings’ variable overhead efficiency variance for
ounces of pecans should Holiday use as a the year ended August 30, 2019 is
standard quantity per fruitcake? A. P33,000 unfavorable
A. 7.20 B. P66,000 unfavorable
B. 7.80 C. P35,520 favorable
C. 8.40 D. P33,000 favorable
D. 8.75
21. Karla Company uses an annual cost formula for During August, a company’s direct materials costs for
overhead of P72,000 + P1.60 for each direct the production of Product HLG were as follows:
labor hour worked. For the upcoming month Standard Unit Price P12. 50
Karla plans to manufacture 96,000 units. Each Standard qty allowed 6,300 units
unit requires five minutes of direct labor. Karla’s for actual production
budgeted overhead for the month is Actual unit purchase P13
A. P12,800 price
B. P84,800 Qty Purchased and 6,900 units
C. P18,800 used for actual
production
D. P774,000
Compute for:
22. The Terrain Company has a standard absorption
and flexible budgeting system and uses a two- 24. The total materials cost variance
way analysis of overhead variances. Selected 25. The materials efficiency or usage variance
data for the June production activity are: 26. The material spending variance of price
Budgeted fixed factory overhead costs P 64,000 variance
Actual factory overhead 230,000
Variable factory overhead rater per DLH P5 A company produces a product with the following
Standard DLH 32,000 standard costs:
Actual DLH 32,000
Materials, 2 pieces @ P5 per piece P10
The budget (controllable) variance for June is Labor 4 hours @P8 per hour 32
A. P1,000 favorable Variable Overhead 4 hours @ P 6 per 24
B. P6,000 favorable hour
C. P1,000 unfavorable Fixed OH* 4 hours @P4 per hour 16
D. P6,000 unfavorable Total standard manufacturing cost per P82
23. Kings Glass Works’ production budget for the unit
*Based on a capacity level of 5,000 units
year ended August 30, 2019 was based on
27. If a flexible budget for 4,500 units, 5,000 units,
200,000 units. Each unit requires two standard
hours of labor for completion. Total overhead and 5,500 units is prepared for a certain month,
the budgeted costs are
was budgeted at P900,000 for the year, and the
fixed overhead rate was estimated to be P3.00 4,500 units 5,000 units 5,500 units
a. P369,000 P410,000 P451,000
per unit. Both fixed and variable overhead are
b. 297,000 330,000 363,000
assigned to the product on the basis of direct
c. 377,000 410,000 443,000
labor hours. The actual data for the year ended d. 0 410,000 0
August 30, 2019 are presented below.
Kings Company produces Four-Season Drinks by
Actual production in units 198,000 mixing juices of four fruits in season. The
 standard costs and input for a 50-liter batch of
the juice are as follows:
Fruits Standard Standard Total
Input Qty Cost Per Standard
in Liters Liter Cost
Santol 20 P10.00 P200.00
Mango 10 21.25 212.50
Pineapple 25 7.50 187.50
Tamarind 5 15.00 75.00
60 P675.00

The quantities purchased and used during the

current month are shown below. A total of 14
batches were produced during the month
Fruits Qty Purchase Qty
Purchased Price used in
in Liters Liters
Santol 300 P9.50 290
Mango 150 22.00 130
Pineapple 350 7.20 350
Tamarind 80 15.40 75
1,450 775

Provide the following:

28. The materials Usage Price Variance

29. The Materials Mix Variance
30. The Materials Yield Variance