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Standard Costing
1. ALPHA Co. uses a standard cost system. Direct materials statistics for the month of May, 19x7 are summarize below:
Standard unit price P90.00
Actual units purchased 40,000
Standard units allowed for actual production 36,250
Materials price variance- favorable P6,000
What was the actual purchase price per unit?
2. ChemKing uses a standard costing system in the manufacture of its single product. The 35,000 units of raw material in
inventory were purchased for P105,000, and two units of raw material are required to produce one unit of final product. In
November, the company produced 12,000 units of product. The standard allowed for material was P60,000, and there was
an unfavorable quantity variance of P2,500. The materials price variance for the units used in November was
3. The Porter Company has a standard cost system. In July the company purchased and used 22,500 pounds of direct
material at an actual cost of P53,000; the materials quantity variance was P1,875 Unfavorable; and the standard quantity of
materials allowed for July production was 21,750 pounds. The materials price variance for July was:
4. The following direct labor information pertains to the manufacture of product Glu:
Time required to make one unit 2 direct labor hours
Number of direct workers 50
Number of productive hours per week, per worker 40
Weekly wages per worker P500
Workers’ benefits treated as direct labor costs 20% of wages
What is the standard direct labor cost per unit of product Glu?
5. ACE Company’s operations for the month just ended originally set up a 60,000 direct labor hour level, with budgeted
direct labor of P960,000 and budgeted variable overhead of P240,000. The actual results revealed that direct labor incurred
amounted to P1,148,000 and that the unfavorable variable overhead variance was P40,000. Labor trouble caused an
unfavorable labor efficiency variance of P120,000, and new employees hired at higher rates resulted in an actual average
wage rate of P16.40 per hour. The total number of standard direct labor hours allowed for the actual units produced is
Forrest Company uses a standard cost system for its production process and applies overhead based on direct labor hours.
The following information is available for August when Forrest made 4,500 units:
Standard:
DLH per unit 2.50
Variable overhead per DLH P1.75
Fixed overhead per DLH P3.10
Budgeted variable overhead P21,875
Budgeted fixed overhead P38,750
Actual:
Direct labor hours 10,000
Variable overhead P26,250
Fixed overhead P38,000
7. Refer to Forrest Company. Using the one-variance approach, what is the total overhead variance?
8. Refer to Forrest Company. Using the two-variance approach, what is the controllable variance?
9. Refer to Forrest Company. Using the two-variance approach, what is the noncontrollable variance?
10. Refer to Forrest Company. Using the three-variance approach, what is the spending variance?