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EXERCISES
1. Actual Factory Overhead P25000
Budgeted allowance based on standard hours allowed:
Fixed overhead budgeted P13000
Variable expenses (3500 SH x P3 SR) P10500 P23500
2. Which of the following people is most likely responsible for an unfavorable variable
overhead efficiency variance?
A. production supervisor C. supplier
B. accountant D. purchasing agent
During the month, the company produced 1,050 units and incurred the following actual
factory overhead costs:
BUDGET VARIANCE
Answer:
VOLUME VARIANCE
Budget allowed on standard hours P 129,500
Standard FOH (1,050 x 3 hours x P40) 126,000
Volume variance P 3,500 F (B)
Answer: C. 2250 UF
During the month, the company produced 1,050 units and incurred the following actual factory
overhead costs:
Variable FOH 3,250 hours at P29 per hour P 94,250
Total P130,750
7. Efficiency Variance
A. 2500 F B. 3500 F C. 1700 UF D. 3000 UF
Answer: EFFICIENCY VARIANCE
8. Volume Variance
A. 3000 F B. 2300 F C. 3500 UF D. 2400 UF
11. HBOs production management estimates that the fixed overhead should be
P700,000 during the upcoming year. However, since a production manager left the
company and was not replaced for several months, actual expenses were lower than
expected, at P672,000.
13. Calculate the variable overhead efficiency variance using the following figures:
Answer:
Difference 6
14. Steptech Inc. manufactures fitness monitoring products. It estimated its fixed
manufacturing overheads for the year 2013 to be P37 million. The actual fixed overhead
expenses for the year 2013 were P40 million.
A. 3M UF. B. 3.5M UF C. 5M F D. 4M F
Answer: A. Fixed Overhead Budget Variance = P37 - P40 = P3 million (unfavorable)
15. Which of the following mathematical expression is used to calculate budgeted variable
overhead cost rate per output unit?
A) Budgeted output allowed per input unit Budgeted variable overhead cost rate per
input unit
B) Budgeted input allowed per output unit Budgeted variable overhead cost rate per
input unit
C) Budgeted output allowed per input unit Budgeted variable overhead cost rate per
input unit
D) Budgeted input allowed per output unit Budgeted variable overhead cost rate per
input unit
Answer: D. Budgeted input allowed per output unit * Budgeted variable overhead cost rate per
input unit
16. When variable overhead efficiency variance is favorable, it can be safely assumed that
the ________.
A) actual rate per unit of the cost-allocation base is higher than the budgeted rate
B) actual quantity of the cost-allocation base used is higher than the budgeted quantity
C) actual rate per unit of the cost-allocation base is lower than the budgeted rate
D) actual quantity of the cost-allocation base used is lower than the budgeted quantity
Answer: D) actual quantity of the cost-allocation base used is lower than the budgeted quantity
Variable overhead spending variance = P2,100 (U) P720 (U) = P1,380 (U)
Ecocomfort Corporation manufactured 1,000 coolers during October. The following variable
overhead data relates to October:
19. Calculate the actual machine hours used by Stark during October.
A. 622 hours
B. 615 hours
C. 608 hours
D. 620 hours
Answer: A.(Actual machine hours 615 budgeted machine hours) P25 = P175
Answer: C. Variable overhead flexible-budget variance = P1,230 (U) + P175 (U) = P1,405 (U)
Actual Budgeted