ACCA Applied Knowledge (BT, MA, FA) · Management Accounting (MA)

Standard costing and variance analysis

16 practice questions, each with the answer and an explanation.

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Random questions from this topic, one at a time. You see the answer and the explanation straight after each one.

All 16 questions

  1. A standard cost card shows 3 kg of material per unit at £4 per kg. In the period 2,000 units were made, using 6,300 kg of material that cost £26,460. What is the material price variance?
  2. Using the same data (standard 3 kg per unit at £4 per kg, 2,000 units made, 6,300 kg used costing £26,460), what is the material usage variance?
  3. A company bought 7,000 kg of material for £29,400 and used 6,300 kg in production. The standard price is £4 per kg. The company calculates the material price variance when materials are purchased. Wha…
  4. The standard labour rate is £9 per hour with 2 hours per unit. In the period 2,000 units were made. 4,200 hours were paid for at a total cost of £39,060, of which 150 hours were idle. What is the labo…
  5. Using the same labour data (standard 2 hours per unit at £9, 2,000 units made, 4,200 hours paid of which 150 were idle), what is the labour efficiency variance?
  6. Using the same data, what is the idle time variance?
  7. Variable production overhead is absorbed at £3 per labour hour (2 hours per unit gives a standard of £6 per unit). In the period 2,000 units were made and 4,050 hours were worked, with variable overhe…
  8. Using the same data (standard 2 hours per unit, £3 per hour, 2,000 units made, 4,050 hours worked), what is the variable overhead efficiency variance?
  9. Budgeted fixed overheads were £28,800 for budgeted output of 2,400 units (absorbed at £12 per unit). Actual output was 2,000 units and actual fixed overheads were £29,500. What is the fixed overhead v…
  10. Using the same data, what is the total fixed overhead variance?
  11. The standard selling price is £50 per unit. In the period 2,000 units were sold at £48 each. What is the sales price variance?
  12. Budgeted sales were 2,400 units with a standard contribution of £22 per unit. Actual sales were 2,000 units. Under marginal costing, what is the sales volume variance?
  13. Budgeted profit was £4,800. The variances for the period were: sales volume £800 adverse; sales price £4,000 adverse; material £2,460 adverse; labour £3,060 adverse; variable overhead £600 adverse; fi…
  14. A company's actual material usage was less than standard (favourable usage variance), but its price variance was adverse. Which explanation is most likely?
  15. Which of the following would be the most likely cause of an adverse labour efficiency variance?
  16. A manager is responsible for production quantities but has no authority over the prices the purchasing department negotiates. Which variance should be reported to the production manager as controllabl…

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