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3 - Discussion - Standard Costing and Variance Analysis

This document contains instructions and questions for 11 exercises on standard costing and variance analysis concepts. The exercises provide information on direct labor costs, direct materials costs, overhead costs, and variances for multiple companies. They ask the learner to calculate variances, actual costs, and other metrics based on standard and actual production and spending figures.

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Charles Tuazon
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3K views1 page

3 - Discussion - Standard Costing and Variance Analysis

This document contains instructions and questions for 11 exercises on standard costing and variance analysis concepts. The exercises provide information on direct labor costs, direct materials costs, overhead costs, and variances for multiple companies. They ask the learner to calculate variances, actual costs, and other metrics based on standard and actual production and spending figures.

Uploaded by

Charles Tuazon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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ACYCST2 ONLINE LEARNING, TERM 3 AY 2019-2020

INSTRUCTOR-LED INDIVIDUAL ACTIVITY: STANDARD COSTING AND VARIANCE ANALYSIS (ADAPTED)

EXERCISE 1
Wham produces one product only and uses the standard cost system. The direct labor standard cost of Whammy
is 1.5 hours at P180.00 per hour. The actual hours used is 1,000 hours at P183.00 per hour. The company produced
500 units.

1. What is the unfavorable direct labor efficiency variance?

EXERCISE 2
During August 2018, a company produced 1,000 units of a product using 3,600 pounds of direct material at a
cost of P2.20 per pound. The direct material standard requires 4 pounds of material per unit of product at a
standard price of P2.00 per pound.

2. The direct material quantity variance is?

EXERCISE 3
The standard direct labor cost for a product is 3 hours at P6 per hour. Budgeted production was 10,000 units for
the year and actual production was 12,000 units. Actual direct labor cost was P210,375 for 38,250 hours.

Compute the following:


3. Direct labor rate variance
4. Direct labor efficiency variance

EXERCISE 4
The Big Book Company builds wooden bookshelf walls units. The company’s standard costs are:

Wood 25 pounds at P6.40 per pound


Trim 8 pounds at P10.00 per pound
Direct labor 5 hours at P12.00 per hour
Variable overhead 5 hours at P6.00 per hour
Fixed overhead P130,000 per period, applied at the rate of P20.00per unit

A recent month’s transactions were: 160,000 pounds of wood were purchased at P6.50 per pound; 50,000 pounds
of trim were purchased at P9.60 per pound. 155,000 pounds of wood were issued to production; 48,500 pounds
of trim were issued to production. Direct labor incurred was 31,000 hours at an average cost of P11.50 per hour.
Overhead costs were P302,000, of which P181,000 were variable. Six thousand units were produced during the
month.

Compute the following:


5. Wood price variance
6. Trim price variance
7. Direct labor rate variance
8. Fixed overhead spending variance
9. Variable overhead efficiency variance

EXERCISE 5
Janice Company uses the standard cost system. The following information on its direct labor costs are provided:

Standard direct labor hours 75,000


Actual direct labor hours 72,500
Direct labor efficiency variance (favorable) P10,000
Direct labor rate variance (favorable) P14,500
Total payroll P275,500

10. What is Janice Company’s actual direct labor rate?

EXERCISE 7
Justine Corporation uses a standard cost system. Direct labor information for product TEN for the month of June
is as follows:

Standard rate P6.00 per hour


Actual rate paid P6.10 per hour
Standard hours allowed for actual production 1,500 hours
Labor efficiency variance P600 unfavorable

11. What are the actual hours worked?

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th
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15 ed.). Pearson Education, Inc.

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