These are ACCA F2 (MA/FMA) Management Accounting MCQs for Part-E of the Syllabus “Standard costing”.

These MCQs are designed in a way that students could better understand the exam format and get used to practice online. This approach will reduce exam stress and enable students to prepare better.

We request the students, Not to solve the MCQs until they have learned and finished the entire F2 (MA/FMA) Management Accounting Chapter 14a – Cost variances and Syllabus Area Part-E “Standard costing”.

All the questions are compulsory, so do not skip any.

INFORMATION ABOUT THESE CBE MCQs Test/Quiz

Course: ACCA – Associations of Chartered Certified Accountants
Fundamental Level: Knowledge, FIA – Foundation in Accounting
Subject: Management Accounting
Paper: F2 – MA/FMA
Chapter: Cost variances
Chapter Number: 14a of the Practice and Exam Kit
Syllabus Area: E – Standard costing
Questions Type: CBE MCQs
Exam Section Type: Section A

Syllabus Area

These Multiple Choice Questions (MCQs) cover the Syllabus Area Part E of the Syllabus; Standard costing of ACCA F2 (MA/FMA) Management Accounting Module.

Time

These multiple-choice questions (MCQs) are not timed, allowing students to solve them without feeling any pressure and to pay proper attention to the questions.

Result

Students can see their result at the end of the Quiz. They can also be able to see the number of correct and wrong questions. Moreover, the explanation of wrong questions.

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MCQs: Choose one from the given options.
Multiple choice: Choose all those answers which seem correct/ or incorrect to you, as per the requirement of the question. Keep your eye on the wording “(select all those which are correct/ or incorrect)“.
Drop-down: Select from the list provided.
Type numbers: Type your answer in numbers as per the requirement of the question.

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F2 - Chapter 14a - Part A - MCQs

Course: ACCA - FIA
Subject: F2 (MA/FMA) Management Accounting
Chapter: 14a - Cost variances
Syllabus Area: E - Standard costing
Exam Section: Section A
Questions type: MCQs
Time: No Time Limit

INSTRUCTIONS

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1 / 19

A company has a budgeted material cost of $125,000 for the production of 25,000 units per month. Each unit is budgeted to use 2 kg of material. The standard cost of material is $2.50 per kg.

Actual materials in the month cost $136,000 for 27,000 units and 53,000 kg were purchased and used.

What was the favourable material usage variance?

2 / 19

A company manufactures a single product L, for which the standard material cost is as follows.

	$ per unit
Material 14 kg x $3	42

During July, 800 units of L were manufactured, 12,000 kg of material were purchased for $33,600, of which 11,500 kg were issued to production.

SM Co values all inventory at standard cost.

What are the material price and usage variances for July?

Price $2,300 (F) , Usage $300 (A)

Price $2,400 (F) , Usage $900 (A)

Price $2,400 (F) , Usage $840 (A)

Price $2,300 (F) , Usage $900 (A)

3 / 19

Number of units produced	2,200	2,000
	Budget	Actual
	$	$
Direct materials	110,000	110,000
Direct labour	286,000	280,000
Variable overhead	132,000	120,000

The actual number of units produced was 2,000.

What was the total direct materials variance?

$10,000 Favourable

Nil

$11,000 Adverse

$10,000 Adverse

4 / 19

Number of units produced	2,200	2,000
	Budget	Actual
	$	$
Direct materials	110,000	110,000
Direct labour	286,000	280,000
Variable overhead	132,000	120,000

The actual number of units produced was 2,000.

What was the total direct variable overheads variance?

Nil

$12,000 Adverse

$12,000 Favourable

$11,000 Adverse

5 / 19

Which of the following statements are true?

A favourable fixed overhead volume capacity variance occurs when actual hours of work are greater than budgeted hours of work
A labour force that produces 5,000 standard hours of work in 5,500 actual hours will give a favourable fixed overhead volume efficiency variance

Both are false

(i) is false and (ii) is true

Both are true

(i) is true and (ii) is false

6 / 19

The following information relates to labour costs for the past month:

Budget	Labour rate	$10 per hour
	Production time	15,000 hours
	Time per unit	3 hours
	Production units	5,000 units

Actual	Wages paid	$176,000
	Production	5,500 units
	Total hours worked	14,000 hours

There was no idle time.

What were the labour rate and efficiency variances?

Rate variance $26,000 (A) , Efficiency variance $10,000 (F)

Rate variance $36,000 (A) , Efficiency variance $25,000 (F)

Rate variance $26,000 (A) , Efficiency variance $25,000 (F)

Rate variance $36,000 (A) , Efficiency variance $2,500 (F)

7 / 19

A company has a budgeted material cost of $125,000 for the production of 25,000 units per month. Each unit is budgeted to use 2 kg of material. The standard cost of material is $2.50 per kg.

Actual materials in the month cost $136,000 for 27,000 units and 53,000 kg were purchased and used.

What was the adverse material price variance?

$_______

8 / 19

Number of units produced	2,200	2,000
	Budget	Actual
	$	$
Direct materials	110,000	110,000
Direct labour	286,000	280,000
Variable overhead	132,000	120,000

The actual number of units produced was 2,000.

What was the total direct labour variance?

$6,000 Favourable

$20,000 Adverse

$22,000 Favourable

Nil

9 / 19

Which of the following would help to explain a favourable direct labour efficiency variance?

Employees were of a lower skill level than specified in the standard
Better quality material was easier to process
Suggestions for improved working methods were implemented during the period

(i), (ii) and (iii)

(i) and (ii) only

(ii) and (iii) only

(i) and (iii) only

10 / 19

Which of the following statements is correct?

An adverse direct material cost variance can be a combination of a favourable material price variance and an adverse material usage variance

An adverse direct material cost variance can be a combination of a favourable material price variance and a favourable material usage variance

An adverse direct material cost variance will always be a combination of an adverse material price variance and an adverse material usage variance

An adverse direct material cost variance will always be a combination of an adverse material price variance and a favourable material usage variance

11 / 19

A company expected to produce 200 units of its product, the Bone, in 20X3. In fact 260 units were produced. The standard labour cost per unit was $70 (10 hours at a rate of $7 per hour). The actual labour cost was $18,600 and the labour force worked 2,200 hours although they were paid for 2,300 hours.

What is the direct labour efficiency variance for the company in 20X3?

$2,800 (F)

$2,100 (F)

$2,800 (A)

$400 (A)

12 / 19

What is the direct labour rate variance for the company in 20X3?

$400 (A)

$2,500 (A)

$2,500 (F)

$3,200 (A)

13 / 19

The graph below shows the standard fixed overhead cost per unit, the total budgeted fixed overhead cost and the actual fixed overhead cost for the month of December. The actual number of units produced in June was 2,500 units.

What is the total fixed overhead variance?

$6,250 Favourable

$3,750 Favourable

$5,000 Adverse

$2,500 Adverse

14 / 19

A company manufactures a single product, and relevant data for December is as follows.

	Budget/standard	Actual
Production units	1,800	1,900
Labour hours	9,000	9,400
Fixed production overhead	$36,000	$39,480

What are the fixed production overhead capacity and efficiency variances for December?

Capacity $1,600 (F) , Efficiency $400 (F)

Capacity $1,600 (A) , Efficiency $400 (F)

Capacity $1,600 (A) , Efficiency $400 (A)

Capacity $1,600 (F) , Efficiency $400 (A)

15 / 19

A manufacturing company operates a standard absorption costing system. Last month 25,000 production hours were budgeted and the budgeted fixed production overhead cost was $125,000. Last month the actual hours worked were 24,000 and the standard hours for actual production were 27,000.

What was the fixed production overhead capacity variance for last month?

$5,000 Favourable

$10,000 Favourable

$10,000 Adverse

$5,000 Adverse

16 / 19

Which of the following statements are true?

The fixed overhead volume capacity variance represents part of the over/under absorption of overheads
A company works fewer hours than budgeted. This will result in an adverse fixed overhead volume capacity variance

Both are true

(i) is true and (ii) is false

Both are false

(i) is false and (ii) is true

17 / 19

The costs below relate to the month of June.

	Fixed budget	Flexed budget	Actual
	2,200 units	2,000 units	2,000 units
Total direct materials	$165,000	$150,000	$140,000

What was the total direct material variance?

$25,000 Adverse

$10,000 Adverse

$10,000 Favourable

$25,000 Favourable

18 / 19

A company has budgeted to make and sell 4,200 units of product X during the period.

The standard fixed overhead cost per unit is $4.

During the period covered by the budget, the actual results were as follows.

Production and sales	5,000 units
Fixed overhead incurred	$17,500

What are the fixed overhead variances for the period?

Fixed overhead Expenditure variance: $700 (F) ; Fixed overhead Volume variance: $3,200 (A)

Fixed overhead Expenditure variance: $700 (A) ; Fixed overhead Volume variance: $3,200 (F)

Fixed overhead Expenditure variance: $700 (F) ; Fixed overhead Volume variance: $3,200 (F)

Fixed overhead Expenditure variance: $700 (A) ; Fixed overhead Volume variance: $3,200 (A)

19 / 19

Extracts from a company's records from last period are as follows.

	Budget	Actual
Production	1,925 units	2,070 units
Variable production overhead cost	$11,550	$14,904
Labour hours worked	5,775	8,280

What are the variable production overhead variances for last period?

Expenditure $1,656 (F) , Efficiency $2,070 (A)

Expenditure $3,354 (A) , Efficiency $4,140 (A)

Expenditure $1,656 (F) , Efficiency $3,726 (A)

Expenditure $1,656 (F) , Efficiency $4,140 (A)

Your score is

F2 (MA/FMA) – Chapter 14a – PART E – CBE MCQs – ACCA