Answer Chapter 11

TRUE OR FALSE
1. T
2. T
3. T
4. T
5. F
6. F
7. T
8. T
9. T
10. T
11. F
12. T
13. T
14. T
15. F
16. F
17. F
18. F
19. T
20. T
21. F
22. T
23. F
24. T
25. F
26. F
27. F
28. T
29. T
30. F
31. T
32. T
33. T
34. T
35. F
36. T
37. F
38. T
39. T
40. T
41. F
42. F

Multiple Choice
1. B
2. B
3. B
4. C
5. D
6. B
7. B
8. B
9. D
10. B
11. A
12. D
13. B
14. C
15. A
16. C
17. A
18. B
19. C
20. B
21. B/C
22. C
23. A
24. A
25. C
26. A
27. A
28. C
29. C
30. C
31. B
32. A
33. B 1,900 U
34. C
35. C normal capacity
36. A Theoretical capacity
37. D 12,000 U
38. D 12,000 U
39. C 3,000 U
40. A 4,00 F
41. A 6,000 U
42. A
43. D 246,000
44. A 243,000
45. C 2,800 F
46. A
47. A 1,500 F
48. B 6,600 F
49. D 7,600 F
50. B 360 F
51. C 6,000 F
52. A
53. A
54. D
55. D 8,000 U
56. D
57. B 75,000
58. C
59. B
60. B
61. C
62. B
63. D
64. A 2,400 U
65. B
66. B
67. D
68. A
69. A
70. A
71. B
72. A
73. D
74. B
75. A
76. A
77. C
78. B
79. A
80. A
81. C
82. B
83. B
84. C
85. B
86. C
87. B
88. D
89. C
90. D
91. C
92. C
93. D
94. C
95. c
96. A/a/d/c/c
Straight Problems
Problem 1

Answer:
Actual Purchase Costs – (AQ x SP)
= 84,000 – (30,000 x 3) 6,000 Favorable
Standard Price = Usage Variance ÷ (AQ – SQ)
3,000 ÷ (30,000 – 29,000) = P3

Problem 2
Answer:
The actual purchase price per unit can be conveniently solved by using the
purchase price variance - MPV = AQ(AP-SP)
-240 = 1,600 (AP – 3.60)
-240 ÷ 1,600 = AP – 3.60
0.15 = AP – 3.60
AP = 3.45

Problem 3
Answer
1.
Qty Price Total Price variance
Actual 8,400 2.40 20,160 21,840 F
Quantity
Actual Qty. x Std. Price 42,000 variance
Standard 8,000 5.0 40,000 2,000 U
(4meters x 2,000 units)

Journal Entry
Materials (actual cost) 20,160
Accounts Payable (actual cost) 20,160

WIP (2.5 x 8,000) 40,000

MQV – unfavorable 2,000
MUPV – favorable 21,840
Materials (2.4 x 8,400) 20,160

2. MPPV = (P2.4 – P 5) x 8,500 = 22,100 F

MQV = (8,400 – 8,000) x P5 = 2,000 U

Time of Purchase
Materials (5 x 8,400) 42,500
MPPV – favorable 22,100
Accounts Payable (actual cost) 20,400
Time of Usage
WIP (Std. cost) 5 x 8,000 40,000
MQV – unfavorable 2,000
Materials (5 x 8,400) 42,000

Problem 4
Answer:
LRV = AH(AR – SR)
-5,500 = 10,000(7.50 – SR)
-5,500 ÷ 10,000 = 7.5 – SR
-0.55 = 7.50 – SR
SR = 8.05

Problem 5
Answer:
Actual hours = Labor rate variance ÷(AR-SR)
P12,000 ÷ (P10 – P9) 12,000 hours

Problem 6

Answer:
Actual cost (20,000 x P15) = 300,000 + 10,000 F labor rate variance = 310,000/20,000
actual hours = P15.50

Qty. Price Total Rate variance

Actual 20,000 15.00 300,000 10,000 F
Efficiency
Actual Hrs. x Std. Rate 310,000 variance
Standard 22,000 15.50 341,000 31,000 F

Work in Process Inventory (std.) 341,000

Labor Rate Variance 10,000
Labor Efficiency Variance 31,000
Wages Payable (actual) 300,000

Problem 7
Answer

1 Materials (std) (60,000 x P3.25) 195,000

Material Price Variance 6,000
Accounts Payable (60,000 x P3.15) 189,000

2 Work in Process (std) (25,000 x 2 x P3.25) 162,500

Material Quantity Variance 8,125

Materials (actual) (52,500 x P3.25) 170,625
 3 Work in Process (std) (25,000 x 0.40 x P12) 120,000

Labor Rate Variance 1,975

Labor Efficiency Variance 1,500
Accrued Payroll (actual) (9,875 x P12.20) 120,475

Problem 8
Answer

1 Materials (std) (50,000 x P14) 700,000

Material Price Variance - F 10,000
Accounts Payable (50,000 x P13.80) 690,000

2 Work in Process (std) (15,000 x 2.5 x P14) 525,000

Material Quantity Variance - U 35,000
Materials (actual) (40,000 x P14) 560,000

3 Work in Process (std) (15,000 x 1.6 x P8) 192,000

Labor Rate Variance- U (8.6 - 8 = 0.60 x 25,000 15,000
Labor Efficiency Variance - U (25,000 - 24,000 = 1,000 x P8 8,000
Accrued Payroll (actual) (25,000 x P8.60) 215,000

Problem 9
Answer:
1.
MPPV MQV
Actual Price (210,000/
60,000) 3.50 Actual Qty 57,000
Standard Price 3.00 Std. Qty. (10,000 x 5.8) 58,000
0.50 1,000
x Actual Qty Purchase 60,000 x Std. Price 3.00
MPPV 30,000 U MQV 3,000 F
2.
LRV LEV
Actual rate (210,000/
60,000) 9.10 Actual Hrs 4,800
Std. Hrs (10,000/ 30
Standard rate 9.00 mins ) 5,000
0.10 200
x Actual hours 4,800 x Std. Rate 9.00
1,800
LRV 480 U LEV F

Problem 10
Answer:

1.
1 W ay Variance Analysis
Actual Factory Overhead
Fixed FOH 140,000
Variable FOH 270,000 410,000
FOH Variance
Less: Standard FOH Costs 20,000 U
Standard Fixed FOH (52,000 units x .50 = 26,000
hrs. x P5) 130,000
Standard Variable FOH (52,000 units x .50 =
26,000 hrs.. x P10) 260,000 390,000

2.
2 W ay Variance
Actual Factory Overhead
140,00
Fixed FOH 0
270,00 410,00
Variable FOH 0 0
Controllabl
e
Less: Budgeted Allowance based on Standard Hours 25,000 U
125,00
Fixed FOH budget (25,000 hrs. x P5) 0
Standard Variable FOH (52,000 units x .50 = 260,00 385,00
26,000 hrs.. x P10) 0 0
Volume
Less: Standard FOH Costs 5,000 F
Standard Fixed FOH (52,000 units x .50 = 130,00
26,000 hrs. x P5) 0
Standard Variable FOH (52,000 units x .50 = 260,00 390,00
26,000 hrs.. x P10) 0 0
3.
3 W ay Variance Analysis
Actual Factory Overhead
Fixed FOH 140,000
Variable FOH 270,000 410,000
Spending
Less: Budgeted Allowance based on Actual Hours 20,000 U
Fixed FOH budget (25,000 hrs. x P5) 125,000
Standard Variable FOH (26,500 hrs. x P10) 265,000 390,000
Efficiency
Less: Budgeted Allowance based on Standard Hours 5,000 U
Fixed FOH budget (25,000 hrs. x P5) 125,000
Standard Variable FOH (52,000 units x .50 = 26,000
hrs.. x P10) 260,000 385,000
Volume
Less: Standard FOH Costs 5,000 F
Standard Fixed FOH (52,000 units x .50 = 26,000
hrs. x P5) 130,000
Standard Variable FOH (52,000 units x .50 = 26,000
hrs.. x P10) 260,000 390,000

4.
4 Way Variance Analysis
Actual Factory Overhead
Fixed
Fixed FOH 140,000 Spending
Less: Budgeted Allowance based on Actual Hours 15,000 U
Fixed FOH budget (25,000 hrs. x P5) 125,000

Actual Factory Overhead

Variable
Variable FOH 270,000 Spending
Less: Budgeted Allowance based on Actual Hours 5,000 U
Standard Variable FOH (26,500 hrs. x P10) 265,000

Budget Variable FOH based on Actual hrs. (26,500 hrs. x P10) 265,000 Efficiency
Budget Variable FOH based on Std. hrs. (52,000 units x .50 =
26,000 hrs.. x P10) 260,000 5,000 U

Fixed FOH budget (25,000 hrs. x P5) 125,000 Volume

Standard Fixed FOH (52,000 units x .50 = 26,000 hrs. x P5) 130,000 5,000 F
Problem 11

Answer
1. M 84,000 + L 52,00 + FOH 21,000 = P157,000 standard cost per unit
2. P157,000 / 5,000 units produced = 31.50 standard cost per unit - 0.15 = 31.35
3.
Total standard cost of meterials used P84,000
Number of units produced 5,000
Standard material cost per unit P16.80
Divide by std. material cost per meter P6
Standard material per unit 2.80 meter

4. 15,000 F: Actual cost 75,000 – Standard cost 84,000 = total material variance
9,000 F + 6,000 U quantity variance = 15,000 F
5.

Standard VFOH cost P21,000

Standard VFOH per direct labor hour P3

Standard Direct labor hours 7,000 hours

6.
Actual cost per unit 31.35
Number of units produced 5,000
Total actual cost 156,750
Less: Actual cost of materials 75,000
Actual cost FOH 18,000
Total actual cost of direct labor 63,750

Actual cost of DL 63,750 – 56,250 (7,500hours x P7.5) = 7,500 U

7. LEV = 52,500 / 7,000 hours = P7.5 x 7,500 hours = 56,250 – Std.52,500 = 3,750 U
8 and 9
Actual VFOH 18,000
Budget VFOH (7,500 x 3) 22,500 4,500 F spending
Standard VFOH (7,000 x 3) 21,000 1,500 U efficiency
Problem 12
Answer
Actual Costs (Actual Qty. x Actual Price)
X 45,000 x 4 180,000
Y 125,000 x 3 375,000
Z 30,000 x 6 180,000 735,000
Actual Qty. x Standard Price Price
X 45,000 x 3 135,000 50,000F
Y 125,000 x 4 500,000
Z : 30,000 x 5 150,000 785,000
Standard Mix % x Total Actual Qty. x Standard Price Mix
X 20% x 200,000 x 3 120,000 5,000 U
Y 70% x 200,000 x 4 560,000
Z 10% x 200,000 x 5 100,000 780,000
Standard Mix % x Total Standard Qty. x Standard Price Yield
X 20% x 190,000 x 3 114,000 39,000 U
Y 70% x 190,000 x 4 532,000
Z 10% x 200,000 x 5 95,000 741,000

X 200 x 3 600
Y700 x 4 2,800
Z 100 x 5 500
Total Standard Input cost 3,900
Divide by Std. output quantity 1 unit
Average Standard output cost 3,900
x Actual units produced 190
Actual output at average Std. output cost 741,000

Problem 13
l Material Price Variance = Actual Mix,Qty,Price - Actual Mix,Quantity,Std Price
= P(49,294 - 48,363)
= P931 U

Total Material Mix Variance = Actual Mix,Qty, Std Price - Std Mix, Price,Actual Qty
= P(48,363 - 44,767)
= P3,596 U

Material Yield Variance = Std Mix, Std Price,Actual Qty - Std Mix, Qty, Price
= P(44,767 - P43,656)
= P1,111 U

Labor Rate Variance = Actual Mix, Qty,Price - Actual Mix,Qty,Std Price

= P(32,500 - 32,500)
= P0

Labor Mix Variance = Actual Mix,Qty, Std Price - Std Mix, Actual Qty, Std Price
= P(32,500 - 33,583)
= P1,083 F
Labor Yield Variance = Std Mix, Act Qty, Std Price - Std Mix, Qty, Price
= P(33,583 - P31,000)
= P2,583 U

Problem 14
Answer:
Actual Costs (Actual Qty. x Actual Price)
B 75% x 10,000 = 7,500 x P8 60,000
X 25% x 10,000 = 2,500 x P9 22,500 82,500
Actual Qty. x Standard Price Price
B 75% x 10,000 = 7,500 x P9 67,500 13,000 F
X 25% x 10,000 = 2,500 x P11.20 28,000 95,500
Standard Mix % x Total Actual Qty. x Standard Price Mix
B 8/12 x 10,000 x P9 60,000 1,833 F
X 4/12 x 10,000 x P11.20 37,333 97,333
Standard Mix % x Total Standard Qty. x Standard Price Yield
B 8/12 x 12,000 x P9 72,000 19,467 F
X 4/12 x 12,000 x P11.20 44,800 116,800

Total Standard Qty.

B 8lb x 1,000 8,000
X 4 lb x 1,000 4,000
Total Standard Qty. 12,000

Actual Qty. x Standard Price

B 75% x 10,000 = 7,500 x P9 67,500
X 25% x 10,000 = 2,500 x P11.20 28,000 95,500
Quantity
Std. Qty. x Standard Price Variance
B 8 lb. x 1,000 units x P9 72,000 21,300 F
X 4 lb. x 1,000 x P11.20 44800 116,800

Or
Total Std. input cost ÷ Total Std. output quantity = Average standard output cost
B (8lbs. X P9) 72.00
X (4lbs. X P11.20) 44.80
Total Standard Input cost 116.80
Divide by Std. output quantity 1 unit
Average Standard output cost 116.80
x Actual units produced 1,000
Actual output at average Std. output cost 116,800
Problem 15
The material price, mix and yield variances will be computed as follows:
Actual Costs (Actual Qty. x Actual Price)
X (10,000 lbs. x P38) 380,000
Y (8,500 lbs. x P84) 714,000
1,240,250
Z (4,500 lbs. x P32.5) 146,250
Actual Qty. x Standard Price P rice

X (10,000 lbs. x P40) 400,000 25,500 U

Y (8,500 lbs. x P80) 680,000

1,215,000
Z (4,500 lbs. x P30) 135,000
Standard M ix % x Total Actual Qty. x Standard Price Mix
X (40% x 23,000 lbs. x P40) 368,000 27,000 F

Y (40% x 23,000 lbs. x P80) 736,000

1,242,000 Quantity
Z (20% x 23,000 lbs. x P30) 138,000 variance
180,000
Standard M ix % x Total Standard Qty. x Standard Price Yield U

A (40% x 1,000 lbs. x 20 units x P40) 320,000 162,000 U

B (40% x 1,000 lbs. x 20 units x P80) 640,000

C (20% x 1,000 lbs. x 20 units x P30) 120,000 1,080,000

Quantity variance = (Actual Qty. – Std. Qty.) x Std. Price

Material (Actual Qty. - Std. Qty.) Std. Price
A (10,000 lbs. - (20 x 400) x P40) 80,000 U
B (8,500 lbs. - (20 x 400) x P80) 40,000 U
C (4,500 lbs. (20 x 200) x P120) 60,000 U
Total 180,000 U

Standard Mix Computation:

Quantity in Standard
Material lbs. Mix
X 400 40%
Y 400 40%
Z 200 20%
Total 1,000 100%