Chapter 13 Standard Costing And Basic Variance Analysis.pdf

F5 acca performance management practice questions F5 acca performance management practice questions F5 acca performance management practice questions

Standard Costing and Basic

Variance Analysis

Prepared for Educational Purposes

August 16, 2025

Contents

1 Part 1: List of Questions 1

2 Part 2: Answers with Detailed Explanations 10

1

1 Part 1: List of Questions

This section contains 50 questions based on Standard Costing and Basic Variance Analy-sis, focusing on sales, materials, labour, and overhead variances Numbers are left-aligned from 1 to 50 For multiple-selection questions, select all that apply

1 A companys budgeted sales for last month were 10,000 units with a standard selling price of $20 per unit and a standard contribution of $8 per unit Last month actual sales of 10,500 units at an average selling price of $19.50 per unit were achieved What were the sales price and sales volume contribution variances for last month?

a Sales price variance: $5,250 Adverse; Sales volume contribution variance: $4,000 Favourable

b Sales price variance: $5,250 Favourable; Sales volume contribution variance: $4,000 Adverse

c Sales price variance: $5,000 Adverse; Sales volume contribution variance: $4,500 Favourable

d Sales price variance: $5,000 Favourable; Sales volume contribution variance: $4,500 Adverse

2 A company uses standard costing and the standard variable overhead cost for a uct is: 6 direct labour hours @ $10 per hour Last month when 3,900 units of the prod-uct were manufactured, the actual expenditure on variable overheads was $235,000 and 24,000 hours were actually worked What was the variable overhead expenditure variance and the variable overhead efficiency variance?

a Expenditure variance: $5,000 Favourable; Efficiency variance: $6,000 Adverse

b Expenditure variance: $5,000 Adverse; Efficiency variance: $6,000 Favourable

c Expenditure variance: $6,000 Favourable; Efficiency variance: $5,000 Adverse

d Expenditure variance: $6,000 Adverse; Efficiency variance: $5,000 Favourable

3 When a manufacturing company operates a standard marginal costing system, then there are no fixed production overhead variances Is this statement true or false?

a False

b True

4 A company operates a standard costing system The variance analysis for last month shows a favourable materials price variance and an adverse labour efficiency variance Which two of the following four statements, which make comparison with standards, are most consistent with the variance analysis?

□ Lower graded workers were used on production

□ Higher graded workers were used on production

□ Inferior quality materials were purchased and used

□ Superior quality materials were purchased and used

5 A company operates a standard marginal costing system Last month actual fixed overhead expenditure was 2% below budget and the fixed overhead expenditure

vari-ance was $1,250 What was the actual fixed overhead expenditure for last month?

a $62,500

b $62,475

c $61,250

d $63,750

6 A company budgeted to sell 8,000 units at $15 per unit with a standard contribution

of $6 per unit Actual sales were 8,200 units at $14.80 per unit What is the sales price variance?

a $1,640 Adverse

b $1,640 Favourable

c $1,200 Adverse

d $1,200 Favourable

7 A companys standard cost for materials is 5 kg at $4 per kg per unit Last month, 2,000 units were produced using 10,200 kg at $3.90 per kg What is the materials price variance?

a $1,020 Favourable

b $1,020 Adverse

c $800 Favourable

d $800 Adverse

8 Which of the following statements is/are true?

1 Standard costing is used to control costs

2 Variances are calculated only for variable costs

a Both statements

b Neither statement

c Statement 1 only

d Statement 2 only

9 A companys standard labour cost is 4 hours at $12 per hour per unit Last month, 1,500 units were produced using 6,200 hours at $12.50 per hour What is the labour rate variance?

a $3,100 Adverse

b $3,100 Favourable

c $2,400 Adverse

d $2,400 Favourable

10 A company uses standard absorption costing The standard fixed overhead cost is

$20,000 for 5,000 units Last month, 5,200 units were produced, and actual fixed overheads were $19,500 What is the fixed overhead expenditure variance?

a $500 Favourable

b $500 Adverse

c $1,000 Favourable

d $1,000 Adverse

11 A companys standard variable overhead cost is 3 hours at $5 per hour per unit Last month, 2,000 units were produced using 6,100 hours at $4.90 per hour What is the variable overhead efficiency variance?

a $500 Adverse

b $500 Favourable

c $1,000 Adverse

d $1,000 Favourable

12 Which of the following statements is/are true?

1 An adverse variance indicates actual costs exceed standard costs

2 Standard marginal costing includes fixed overhead volume variances

a Both statements

b Neither statement

c Statement 1 only

d Statement 2 only

13 A company budgeted to sell 12,000 units at $25 per unit with a standard contribution

of $10 per unit Actual sales were 11,800 units at $25.50 per unit What is the sales volume contribution variance?

a $2,000 Adverse

b $2,000 Favourable

c $1,800 Adverse

d $1,800 Favourable

14 A companys standard material cost is 2 kg at $6 per kg per unit Last month, 3,000 units were produced using 6,200 kg at $5.80 per kg What is the materials usage variance?

a $1,200 Adverse

b $1,200 Favourable

c $1,400 Adverse

d $1,400 Favourable

15 A company operates a standard costing system with a favourable labour rate vari-ance and an adverse materials usage varivari-ance Which two of the following are most consistent with these variances?

□ Lower skilled workers were used

□ Higher skilled workers were used

□ Lower quality materials were used

□ Higher quality materials were used.

16 A companys standard labour cost is 5 hours at $15 per hour per unit Last month, 1,000 units were produced using 5,200 hours at $14.80 per hour What is the labour efficiency variance?

a $3,000 Adverse

b $3,000 Favourable

c $2,500 Adverse

d $2,500 Favourable

17 A company uses standard marginal costing Actual fixed overheads were $50,000, and the budgeted fixed overheads were $51,000 What is the fixed overhead expenditure variance?

a $1,000 Favourable

b $1,000 Adverse

c $2,000 Favourable

d $2,000 Adverse

18 Which of the following statements is/are true?

1 Standard costing helps in performance evaluation

2 Variances are always financial in nature

a Both statements

b Neither statement

c Statement 1 only

d Statement 2 only

19 A companys standard variable overhead cost is 4 hours at $8 per hour per unit Last month, 2,500 units were produced using 10,200 hours at $7.90 per hour What is the variable overhead expenditure variance?

a $1,020 Favourable

b $1,020 Adverse

c $800 Favourable

d $800 Adverse

20 A company budgeted to sell 9,000 units at $18 per unit with a standard contribution

of $7 per unit Actual sales were 9,500 units at $17.80 per unit What is the sales price variance?

a $1,900 Adverse

b $1,900 Favourable

c $1,800 Adverse

d $1,800 Favourable

21 A companys standard material cost is 3 kg at $5 per kg per unit Last month, 4,000

units were produced using 12,500 kg at $4.90 per kg What is the materials price variance?

a $1,250 Favourable

b $1,250 Adverse

c $1,500 Favourable

d $1,500 Adverse

22 A company operates a standard absorption costing system The standard fixed over-head cost is $30,000 for 6,000 units Last month, 6,200 units were produced, and actual fixed overheads were $29,500 What is the fixed overhead expenditure vari-ance?

a $500 Favourable

b $500 Adverse

c $1,000 Favourable

d $1,000 Adverse

23 Which of the following statements is/are true?

1 An adverse materials usage variance may result from inferior materials

2 Standard absorption costing includes fixed overhead volume variances

a Both statements

b Neither statement

c Statement 1 only

d Statement 2 only

24 A companys standard labour cost is 6 hours at $10 per hour per unit Last month, 2,000 units were produced using 12,300 hours at $10.20 per hour What is the labour rate variance?

a $2,460 Adverse

b $2,460 Favourable

c $2,000 Adverse

d $2,000 Favourable

25 A companys standard variable overhead cost is 5 hours at $6 per hour per unit Last month, 3,000 units were produced using 15,200 hours at $5.90 per hour What is the variable overhead efficiency variance?

a $1,200 Adverse

b $1,200 Favourable

c $1,500 Adverse

d $1,500 Favourable

26 A company operates a standard marginal costing system Actual fixed overheads were 3% below budget, and the fixed overhead expenditure variance was $1,800 What was the actual fixed overhead expenditure?

a $58,200

b $60,000

c $61,800

d $63,000

27 A company budgeted to sell 15,000 units at $22 per unit with a standard contribution

of $9 per unit Actual sales were 14,800 units at $22.20 per unit What is the sales volume contribution variance?

a $1,800 Adverse

b $1,800 Favourable

c $2,000 Adverse

d $2,000 Favourable

28 A companys standard material cost is 4 kg at $7 per kg per unit Last month, 2,500 units were produced using 10,200 kg at $6.80 per kg What is the materials usage variance?

a $1,400 Adverse

b $1,400 Favourable

c $1,600 Adverse

d $1,600 Favourable

29 A company operates a standard costing system with a favourable materials usage variance and an adverse labour rate variance Which two of the following are most consistent with these variances?

□ Higher skilled workers were used

□ Lower skilled workers were used

□ Higher quality materials were used

□ Lower quality materials were used

30 A companys standard labour cost is 3 hours at $14 per hour per unit Last month, 1,200 units were produced using 3,700 hours at $13.80 per hour What is the labour efficiency variance?

a $1,400 Adverse

b $1,400 Favourable

c $1,600 Adverse

d $1,600 Favourable

31 A company uses standard marginal costing Actual fixed overheads were $40,000, and the budgeted fixed overheads were $41,500 What is the fixed overhead expenditure variance?

a $1,500 Favourable

b $1,500 Adverse

c $2,000 Favourable

d $2,000 Adverse

32 Which of the following statements is/are true?

1 Standard costing requires setting predetermined costs

2 Variances are only calculated for materials and labour

a Both statements

b Neither statement

c Statement 1 only

d Statement 2 only

33 A companys standard variable overhead cost is 2 hours at $7 per hour per unit Last month, 4,000 units were produced using 8,200 hours at $6.80 per hour What is the variable overhead expenditure variance?

a $1,640 Favourable

b $1,640 Adverse

c $1,400 Favourable

d $1,400 Adverse

34 A company budgeted to sell 7,000 units at $16 per unit with a standard contribution

of $5 per unit Actual sales were 7,200 units at $15.90 per unit What is the sales price variance?

a $720 Adverse

b $720 Favourable

c $700 Adverse

d $700 Favourable

35 A companys standard material cost is 6 kg at $3 per kg per unit Last month, 5,000 units were produced using 30,500 kg at $2.90 per kg What is the materials price variance?

a $3,050 Favourable

b $3,050 Adverse

c $3,500 Favourable

d $3,500 Adverse

36 A company operates a standard absorption costing system The standard fixed over-head cost is $25,000 for 5,000 units Last month, 5,100 units were produced, and actual fixed overheads were $24,800 What is the fixed overhead expenditure vari-ance?

a $200 Favourable

b $200 Adverse

c $500 Favourable

d $500 Adverse

37 Which of the following statements is/are true?

1 An adverse labour efficiency variance may result from machine downtime

2 Standard marginal costing includes fixed overhead efficiency variances

a Both statements

b Neither statement

c Statement 1 only

d Statement 2 only

38 A companys standard labour cost is 7 hours at $11 per hour per unit Last month, 1,800 units were produced using 12,800 hours at $11.20 per hour What is the labour rate variance?

a $2,560 Adverse

b $2,560 Favourable

c $2,200 Adverse

d $2,200 Favourable

39 A companys standard variable overhead cost is 3 hours at $9 per hour per unit Last month, 2,200 units were produced using 6,800 hours at $8.80 per hour What is the variable overhead efficiency variance?

a $1,800 Adverse

b $1,800 Favourable

c $2,000 Adverse

d $2,000 Favourable

40 A company operates a standard marginal costing system Actual fixed overheads were 4% below budget, and the fixed overhead expenditure variance was $2,000 What was the actual fixed overhead expenditure?

a $48,000

b $50,000

c $52,000

d $54,000

41 A company budgeted to sell 20,000 units at $30 per unit with a standard contribution

of $12 per unit Actual sales were 19,500 units at $30.50 per unit What is the sales volume contribution variance?

a $6,000 Adverse

b $6,000 Favourable

c $5,500 Adverse

d $5,500 Favourable

42 A companys standard material cost is 5 kg at $8 per kg per unit Last month, 3,500

units were produced using 17,800 kg at $7.90 per kg What is the materials usage variance?

a $2,400 Adverse

b $2,400 Favourable

c $2,600 Adverse

d $2,600 Favourable

43 A company operates a standard costing system with a favourable labour efficiency variance and an adverse materials price variance Which two of the following are most consistent with these variances?

□ Higher skilled workers were used

□ Lower skilled workers were used

□ Higher quality materials were used

□ Lower quality materials were used

44 A companys standard labour cost is 4 hours at $16 per hour per unit Last month, 1,500 units were produced using 5,900 hours at $16.20 per hour What is the labour efficiency variance?

a $1,600 Adverse

b $1,600 Favourable

c $1,800 Adverse

d $1,800 Favourable

45 A company uses standard marginal costing Actual fixed overheads were $60,000, and the budgeted fixed overheads were $62,000 What is the fixed overhead expenditure variance?

a $2,000 Favourable

b $2,000 Adverse

c $1,500 Favourable

d $1,500 Adverse

46 Which of the following statements is/are true?

1 Standard costing aids in budgeting and control

2 Variances are only calculated for absorption costing systems

a Both statements

b Neither statement

c Statement 1 only

d Statement 2 only

47 A companys standard variable overhead cost is 4 hours at $10 per hour per unit Last month, 3,200 units were produced using 13,000 hours at $9.80 per hour What is the variable overhead expenditure variance?

a $2,600 Favourable

b $2,600 Adverse

c $2,800 Favourable

d $2,800 Adverse

48 A company budgeted to sell 6,000 units at $12 per unit with a standard contribution

of $4 per unit Actual sales were 6,300 units at $11.90 per unit What is the sales price variance?

a $630 Adverse

b $630 Favourable

c $600 Adverse

d $600 Favourable

49 A companys standard material cost is 7 kg at $4 per kg per unit Last month, 4,500 units were produced using 32,000 kg at $4.10 per kg What is the materials price variance?

a $3,200 Adverse

b $3,200 Favourable

c $3,500 Adverse

d $3,500 Favourable

50 A company operates a standard absorption costing system The standard fixed over-head cost is $40,000 for 8,000 units Last month, 8,200 units were produced, and actual fixed overheads were $39,500 What is the fixed overhead expenditure vari-ance?

a $500 Favourable

b $500 Adverse

c $1,000 Favourable

d $1,000 Adverse

2 Part 2: Answers with Detailed Explanations

1 a Sales price variance: $5,250 Adverse; Sales volume contribution variance: $4,000

Favourable Explanation: Sales price variance = (19.50 − 20.00) × 10, 500 = −5, 250

(Adverse) Sales volume contribution variance = (10, 500 − 10, 000) × 8 = 4, 000

(Favourable)

2 a Expenditure variance: $5,000 Favourable; Efficiency variance: $6,000 Adverse

Explanation: Standard hours = 3, 900 × 6 = 23, 400 Expenditure variance =

235, 000 − (24, 000 × 10) = −5, 000 (Favourable) Efficiency variance = (24, 000 −

23, 400) × 10 = 6, 000 (Adverse).

3 b True Explanation: In marginal costing, fixed overheads are period costs, so no

fixed overhead variances are calculated