Chapter 13 Self-test questions

Standard costing and variance analysis
. Which one of the following will not form part of the variable overheads variance calculations?

. Which of the following are limitations of standard costing? Please select all that apply.

. Sales price variance = (actual sales in units – budgeted sales in units) x standard contribution per unit.

. The direct material price variance shows how much of the total direct material variance is due to higher or lower usage of direct material in the actual production achieved.

. The budgets for product A indicate a fixed overhead allocation per unit of production of £6 and a variable overhead per unit of production of £8 based on a budget of 2,000 units per month production. During April, 2,500 units of product A were produced incurring £13,000 fixed overhead and £19,000 of variable overhead. What was the fixed overhead expenditure variance for April?

. Product A is expected to use 5 metres of material at a standard cost of £5 per metre. In June, 2,700 metres of material were used to produce 600 products. The total cost of material in June was £16,200. What is the direct material price variance if budgeted production for June was 575 product As?

. How are standard costs calculated and derived? Please select all that apply.

. (Standard hours for actual production – actual hours for actual production) x standard rate per hour = direct_____________ variance.

. Standard costing involves actual costs and revenues associated with a product or service.

. Which of the following factors would explain an unfavourable direct labour efficiency variance? Please select all that apply.

. CBB Limited uses a standard costing system for all its products. Product A has a standard selling price of £50 and budgeted total sales for the year ended 31 August 2021 of 5,000 units. The actual selling price for Product A throughout the year to 31 August 2021 was £48 and the actual units sold were 5,100. The actual variable cost of Product A amounted to £32 per unit in the year to 31 August 2021 while the standard variable cost of Product A is £33. Based on these actual and standard costs and revenues, what is the sales volume variance for Product A for the year ended 31 August 2021?

. ZTC Limited's standard costing system shows that each jacket has a standard input material requirement of 4 metres of cloth. Cloth has a standard cost of £2.00 per metre. During July, budgeted production of jackets was 1,000. However, due to additional demand, 1,200 jackets were produced, using a total of 4,950 metres of cloth at a total cost of £9,360. What was ZTC Limited's direct material usage variance for the month of July?

. PDT Limited uses a standard costing system. PDT Limited produces concrete slabs. The standard labour time for one concrete slab is 15 minutes. Direct labour is paid at the rate of £15 per hour. The company budgeted to produce 3,200 concrete slabs in March. Actual production for March was 3,400 concrete slabs. 835 labour hours were paid in March at a total cost of £12,692. What is the direct labour rate variance for concrete slabs for March?

. PDT Limited uses a standard costing system. PDT Limited produces concrete slabs. The standard labour time for one concrete slab is 15 minutes. Direct labour is paid at the rate of £15 per hour. The company's budgeted production for March was 3,200 concrete slabs. Actual production for March was 3,400 concrete slabs. 835 labour hours were paid in March. Variable overhead is allocated to concrete slabs at the standard rate of £5.00 per labour hour and the actual variable overhead cost for March was £4,105. What is the variable overhead expenditure variance for concrete slabs for March?

. TVT Limited uses a standard costing system. TVT Limited produces kitchen worktops in standard 6 metre lengths. The standard labour time for one kitchen worktop is 2 hours. Direct labour is paid at the rate of £18 per hour. The company's budgeted production of kitchen worktops in May was 4,000. Actual production for May was 3,800 kitchen worktops. 7,550 labour hours were paid in May at a total cost of £135,145. What is the direct labour total variance for kitchen worktops for May?

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