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    CA 07 - Standard Costing

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    Joshua Umali
    This document contains lecture notes on standard costing that include 4 practice problems. Problem 1 covers materials and labor variance analysis using standards. Problem 2 covers materials yield and mix variances. Problem 3 involves calculating a flexible budget for factory overhead. Problem 4 provides factory overhead variance analysis using the two-way, three-way, and four-way variance methods. The last section provides another example of overhead variance analysis.

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    CA 07 - Standard Costing

    Uploaded by

    Joshua Umali
    127 views3 pages
    This document contains lecture notes on standard costing that include 4 practice problems. Problem 1 covers materials and labor variance analysis using standards. Problem 2 covers materials yield and mix variances. Problem 3 involves calculating a flexible budget for factory overhead. Problem 4 provides factory overhead variance analysis using the two-way, three-way, and four-way variance methods. The last section provides another example of overhead variance analysis.

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    This document contains lecture notes on standard costing that include 4 practice problems. Problem 1 covers materials and labor variance analysis using standards. Problem 2 covers materials yield and mix variances. Problem 3 involves calculating a flexible budget for factory overhead. Problem 4 provides factory overhead variance analysis using the two-way, three-way, and four-way variance methods. The last section provides another example of overhead variance analysis.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    127 views3 pages

    CA 07 - Standard Costing

    Uploaded by

    Joshua Umali
    This document contains lecture notes on standard costing that include 4 practice problems. Problem 1 covers materials and labor variance analysis using standards. Problem 2 covers materials yield and mix variances. Problem 3 involves calculating a flexible budget for factory overhead. Problem 4 provides factory overhead variance analysis using the two-way, three-way, and four-way variance methods. The last section provides another example of overhead variance analysis.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    UCP: CA 07_Standard Costing AY 2019-

    2020

    Universal College of Paranaque


    College of Business & Accounting

    CA 07 – STANDARD COSTING
    LECTURE NOTES
    Problem 1: Materials and Labor Variance Analysis

    Kodak Company has established the following standards for a single unit of its main product, Selfie Camera Tripod
    (Stainless Edition):

    Inputs Standards
    Direct materials 3 metal bars at P2 per bar
    Direct labor ½ labor hour at P10 per hour

     At the start of the month, the budget includes a planned production of 100 units of tripod based on normal
    capacity.
     At the end of the month, actual production was 120 units of tripod, which resulted to using 400 bars of
    metal, purchased at a cost of P2.10 per bar.

    Required:

    1. Based on the BUDGETED production of 100 units:

    A. How many bars must the company plan to use? (Budgeted quantity)
    B. How much materials cost is included in the budget? (Budgeted cost)

    2. Determine the actual cost of materials used (Actual cost)

    3. Based on the ACTUAL production of 120 units:

    A. How many bars should have been used? (Standard Quantity)


    B. How much materials cost should have been incurred? (Standard material cost)
    C. How many labor hours should have been spent? (Standard hours)
    D. How much labor cost should have been incurred? (Standard labor cost)

    5. In the following month, Kodak purchased 500 bars at a total cost of P850 while only 400 bars out of these were
    used; the standard quantity allowed for the actual production was 380 bars. Determine the following:

    A. Total material variance


    B. Materials quantity variance
    C. Materials price usage variance
    D. Materials purchase price variance

    6. During the month, a total payroll of P540 was paid to laborers, working 45 labor hours, to produce the 120 units
    of Tripod. Determine the following:

    A. Total labor variance


    B. Labor efficiency variance
    C. Labor rate variance

    Cost Accounting by Joshua S. Umali, CPA Page 1 of 3


    Dream… Believe… Survive…
    UCP: CA 07_Standard Costing AY 2019-
    2020
    Problem 2: Materials Yield and Mix Variances

    The engineering staff of Robert Industrial Design estimates that 8 ounces of rubber will be required to produce a
    green widget. During the most recent month, the production process used 315,000 ounces of rubber to create 35,000
    green widgets, which is 9 ounces per product. Each ounce of rubber has a standard cost of 0.50. Its material yield
    variance for the month is:

    For 500 KG of finish of finished product, the standard material inputs required are given below:

    Material Quantity in KG Standard rate per KG


    A 225 40.00
    B 200 80.00
    C 125 30.00

    Standard loss – 50
    Standard output – 500

    1,000 KG of the finished product has been actually produced during the period for which the actual quantities if
    materials used and the prices paid there for are as under:

    Material Quantity used ( in KG) Purchase rate per KG (in $)


    A 5,000 38.00
    B 4,250 84.00
    C 2,250 32.50

    Required: Calculate the material mix variance.

    Problem 3: Factory Overhead Budget:


    RAFA Company shows the following data regarding its factory overhead:

    Flexible budget formula: FOH = 20,000 + 1X

    Where: X = number of labor hours.

     Standard: 1 unit of product requires 4 labor hours.


     Normal Capacity: 2,500 units.
     Budgeted Hours: A)______ hours.

    Fixed Overhead (FFOH) B)_________ Fixed Overhead Rate (FR) E)________


    Variable Overhead (VFOH) C)_________ Variable Overhead Rate (VR) F)________
    Total Budgeted Overhead D)_________ Standard Overhead Rate (SR) G)________

    Required:

    1. Compute for the missing amounts.


    2. What is the budgeted FOH if adjusted based on 7,500 actual hours?
    3. What is the budgeted FOH if adjusted based on 8,000 standard hours?

    Problem 4: (Factory Overhead Variance Analysis – Two, Three, and Four Way Variance Method)

    Spain Company provides the following production data:

    Standard factory overhead cost per unit of product: 4 hours at P3.00 per hour

    A) Budgeted fixed factory overhead P20,000

    Cost Accounting by Joshua S. Umali, CPA Page 2 of 3


    Dream… Believe… Survive…
    UCP: CA 07_Standard Costing AY 2019-
    2020
    B) Normal Production 2,500 units
    C) Actual Production 2,000 units
    D) Actual Hours 7,500 hours
    E) Actual/ Factory overhead incurred (75% fixed) P26,000
    Required:

    1. Budgeted factory overhead 6. Volume Variance


    2. Standard factory overhead 7. Spending Variance
    3. Budgeted FOH based on actual hours 8. Efficiency Variance
    4. Budgeted FOH based on standard hours 9. Variable spending variance
    5. Controllable variance 10. Fixed spending variance

    CHIGGY Corporation 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 Chiggy Corporation made 4,500
    units:

    STANDARDS:

    DHL 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

    Required:

    1. Budgeted factory overhead 6. Volume Variance


    2. Standard factory overhead 7. Spending Variance
    3. Budgeted FOH based on actual hours 8. Efficiency Variance
    4. Budgeted FOH based on standard hours 9. Variable spending variance
    5. Controllable variance 10. Fixed spending variance

    -END-

    “Keep Going.”

    Cost Accounting by Joshua S. Umali, CPA Page 3 of 3


    Dream… Believe… Survive…

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