1 Iron Eagle makes wrought iron table and chair sets.

During April 2001, the purchasing agent bought 12,800 pounds of scrap iron
at $0.89 per pound. Each set requires a standard quantity of 35 pounds at a
standard cost of $0.85 per pound. During April, the company used 10,700
pounds and produced 300 sets.

For April, compute the direct material price variance (based on the quantity purchased)
and the direct material quantity variance.

2 In August 2001, East Publishing Company’s costs

and quantities of paper consumed in manufacturing its 2002 Executive Planner
and Calendar were as follow:

Actual unit purchase price $0.16 per page

Standard quantity allowed for good production 195,800 pages
Actual quantity purchased during August 230,000 pages
Actual quantity used in August 200,000 pages
Standard unit price $0.15 per page

REQUIRED
Calculate the total cost of purchases for August?
Compute the material price variance (based on quantity purchased)?
Calculate the material quantity variance?

Nelson Prefabricated Walls builds standard prefabricated

wooden frames for apartment walls. The standard quantity of direct labor
is 5 hours for each frame at an average standard hourly wage of $22. During
May 2001, the company produced 630 frames. The payroll records indicated
that the carpenters worked 3,100 hours and earned $71,300.

3 REQUIRED
What were the standard hours allowed for May construction?
Calculate the direct labor variances?

In auditing the inventory account of a client, the accounting

firm of Freeman and Associates set the following standard: 300 hours
at an hourly rate of $45. The firm actually worked 270 hours auditing inventory.
The total labor variance for the inventory audit was $500 unfavorable.

4 REQUIRED
Compute the total actual payroll?
Compute the labor efficiency variance?
 Compute the labor rate variance?

Lisa Scamponi Ltd. produces

evening bags. In December 2001, Ms. Scamponi, president of the company,
received the following information from Antonio Buffa, the new controller, in
regard to November production:

Production during month 1,200 handbags

Actual cost of material purchased and used $4,767.18
Standard material allowed 1/3 square yard per bag
Material quantity variance $594 U
Actual hours worked 2,520
Standard labor time per handbag 2 hours
Labor rate variance $630 F
Standard labor rate per hour $7
Standard price per yard of material $8

5 REQUIRED
The standard quantity of material allowed for November production?
The standard direct labor hours allowed for November production?
The material price variance?
The labor efficiency variance?
The standard prime (direct material and direct labor) cost to produce one bag?
The actual cost to produce one bag in November?

Rainbow Painting Services Inc.

paints interiors of residences and commercial structures. The firm’s management
has established cost standards based on the amount of area to be painted.
100 SQUARE FEET
Direct material ($18 per gallon of paint): $1.50 per 100 square feet
Direct labor: $2 per 100 square feet
Variable overhead: $0.60 per 100 square feet
Fixed overhead (based on 600,000 square feet per month): $1.25 per 100 square feet

Management has determined that 400 square feet can be painted by the average
worker each hour. During May 2001, the company painted 600,000 square feet
of wall and ceiling space. The following costs were incurred:

Direct material (450 gallons purchased and used) $8,550.00

Direct labor (1,475 hours) 12,242.50
 Variable overhead 3,420.00
Fixed overhead 7,740.00

6 REQUIRED
Compute the direct material variances?
Compute the direct labor variances?
Use a four-variance approach to compute overhead variances?
Use a three-variance approach to compute overhead variances?
Use a two-variance approach to compute overhead variances?

Badman Company’s direct labor costs:

Standard direct labor hours 30,000
Actual direct labor hours 29,000
Direct labor usage (efficiency) va P4,000
Direct labor rate variance -favor 5,800
Total payroll 110,200

3 Standard direct labor rate and actual direct labor rate?

Company had budgeted 50,000 units of output using 50,000 units of raw
materials at a total material cost of P100,000. Actual output was of 50,000 units of
product, requiring 45,000 units of raw materials at a cost of P2.10 per unit.

4 The direct material price variance and usage variance were

Information on Rex Co.'s direct material costs for May is as follows:

Actual quantity ofdirect materials purchase 30,000 lbs

Actual cost ofdirect materials 84,000
Unfavorable direct materials usage variance 3,000
Standard quantity ofdirect materials allowe 29,000 lbs

5 For the month of May, MPV is?

6 Shoo Company is a chemical manufacturer that supplies industrial users. The company plans to
introduce a new solution and needs to develop a standard product cost for this.

The new solution is made by combining a chemical compound (A1) and a solution (B), boiling
the mixture; adding a second compoun (A2), and bottling the resulting solution in a 20-liter
containers. The initial mix, which is 20 liters in volume, consists of 24 kilos of A1 and 19.2
liters of B. A 20% reduction in vokume occurs during the boiling process. The solution is then
cooled slightly before 10 kilos of A2 are added; the addition of A2 does not affect the total
liquid volume.

Purchase prices of raw materials used in the manufacture of this new solutions follow:
A1 15 per kilo
B 21 per liter
A2 28 per kilo

Standard material cost of 20 liters of the product is?

7 Landi Co uses a standard costing system in connection with the manufacture of a line of tshirts. Each
unit of finished product contains 2.25 yards of direct material. However, a 25% material spoilage
calucluated on input quantities occurs during the manufacturing process. The cost of diret materials
is P150 per yard. The standard direct material cost per unit of finished product is?
 tshirts. Each

ret materials
 8 The following standards for variable manufacturing overhead have been established for a company that m

Standard hours per unit of output 1.2 hours

Standard variable overhead rate P10.20 per hour

The following data pertain to operations for the last month:

Actual hours 5,000 hours

Actual total variable overhead cost P52,750
Actual output 4,000 units

What is the variable overhead efficiency variance for the month?

9 Grefrath Corporation is developing direct labor standards. A particular product requires 0.71 direct labor
per unit. The allowance for breaks and personal needs is 0.04 direct labor-hours per unit. The allowance for clea
machine downtime, and rejects is 0.12 direct labor-hours per unit. The standard direct labor-hours per unit shou

10 Leo Company's direct labor costs for the month of January were as follows

Actual total direct labor-hours 20,000

Standard total direct labor-hours 21,000
Direct labor rate variance—unfavorable P3,000
Total direct labor cost P126,000

What was Lion's direct labor efficiency variance?

PROBLEM 1
The standard prime cost of the sold product of August Manufacturing Inc consist of the following:

Direct materials cost (3 lbs at P2.00)

Direct labor cost ( 5 hrs at P3.00)

Factory OH based on normal capacity of 30,000 labor hours is P90,000 (including fixed FOH of P30,000)

The following are fgiven on actual operations

Units of production
Prime cost:
Direct materials (14,800 lbs at P2.10)
 Diret labor (25,500 at P2.80)
Factory OH

REQUIRED:
1. MATERIALS COST VARIANCE
2. QUANTITY VARIANCE
3. PRICE VARIANCE
4. LABOR COST VARIANCE
5. EFFICIENCY VARIANCE
6. RATE VARIANCE
7. FACTORY OVERHEAD VARIANCE
8. FIXED EFFICIENCY VARIANCE
9. VARIABLE EFFECIENCY VARIANCE
ablished for a company that makes only one product

uct requires 0.71 direct labor-hours

per unit. The allowance for cleanup,
irect labor-hours per unit should be:

of the following:

6
15

fixed FOH of P30,000)

5,000 units

31,080.00
71,400.00
69,200.00