OxfordAQA A-Level Accounting: Standard costing and variance analysis (9615) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover section 3.2.1 Standard costing and variance analysis of the OxfordAQA International AS and A-level Accounting (9615) specification, Version 1.2, for International AS exams May/June 2025 onwards and International A-level exams May/June 2026 onwards. The section is International A-level only, assessed on Paper 4: Accounting for analysis and decision making. Amounts are in dollars and every business is invented.

Revise first from the study guide or the revision notes. Course links: hub · printable checklist · free 10-minute diagnostics.

Questions

1. Define the terms standard cost and variance analysis. [2]

2. Explain two advantages to a manufacturer of operating a standard costing system. [4]

3. Ardwinton Sails uses a standard of 14 metres of sailcloth per sail at 7.50 per metre. In April it made 260 sails and used 3,710 metres, costing 26,712. Calculate both materials variances (price and usage), labelling each favourable or adverse. [4]

4. Pentreath Bakehouse sets a labour standard of 0.2 hours per tray of rolls at 13.50 per hour. Last month it produced 9,400 trays. Bakers worked and were paid for 1,950 hours, costing 25,935.

(a) Calculate the labour variances for rate and for efficiency. [4] (b) Suggest one possible cause of the labour efficiency variance. [2]

5. Corsley Scooters budgeted to sell 900 scooters at 240 each. The standard variable cost is 150 per scooter. It actually sold 840 scooters at 255 each.

(a) Calculate the sales price variance and the sales volume variance. [4] (b) Comment on whether the price rise benefited the business. [2]

6. Drumcliffe Packaging has a labour standard of 0.75 hours per carton run at 15.00 per hour. It completed 2,000 runs, and staff worked and were paid for 1,460 hours. The total labour variance was 495 adverse.

(a) Calculate the labour efficiency variance. [2] (b) Calculate the labour rate variance. [1] (c) Calculate the actual rate paid per hour. [2]

7. Morvah Upholstery replaced several experienced upholsterers with trainees on a lower hourly rate. The variances for the month were: labour rate 2,880 F, labour efficiency 3,520 A, materials usage 1,140 A. Explain how these variances may be linked, and assess whether the staffing change benefited the business this month. [6]

8. Hindlip Flasks makes insulated steel flasks. Standard cost per flask: steel 0.8 kg at 5.00 per kg; labour 0.25 hours at 18.00 per hour. The budget was for 10,000 flasks. Actual output was 10,400 flasks, using 8,480 kg of steel costing 41,552 and 2,540 labour hours costing 47,244.

(a) Calculate the four materials and labour variances. [4] (b) Prepare a statement reconciling the budgeted cost of materials and labour with the actual cost. [4]

9. Glenarvon Kayaks makes one sea kayak. Its standard cost card per kayak is: polymer 18 kg at 4.00 per kg; labour 6 hours at 15.00 per hour. The standard selling price is 380. The budget was to make and sell 500 kayaks, with fixed overheads of 70,000.

Actual results: 520 kayaks were made and sold at 370 each. Polymer used was 9,520 kg, costing 39,032. Labour was 3,050 hours, costing 46,970. Fixed overheads were 70,000.

(a) Work out the profit in the budget and the profit actually made. [2] (b) Calculate the six sales, materials and labour variances. [6] (c) Prepare a statement reconciling the budgeted profit with the actual profit. [4]

10. The directors of Tansley Pumps plan to pay the purchasing manager a bonus equal to 10% of any favourable materials price variance, and the production supervisor a bonus equal to 10% of any favourable labour efficiency variance. Evaluate this proposal. [12]

Answers

1. A standard cost is the planned cost of making one unit, decided before production begins from expected quantities and prices [1]. Variance analysis compares actual results with standards, measures the differences and explains their causes so managers can act [1]. [2] Examiner insight: “Expected cost” on its own is too vague; say the cost is set in advance and per unit.

2. Responsibility: each variance is traced to one manager [1], such as the buyer for material prices, who can then be held to account [1]. Management by exception: only significant variances need investigating [1], which saves senior managers’ time for the problems that matter [1]. [4] Examiner insight: “Explain” needs each advantage developed into a consequence for the business, not a bare list.

3. Actual price = 26,712 ÷ 3,710 = 7.20 per metre. Price variance = (7.50 − 7.20) × 3,710 [1] = 1,113 F [1]. Standard quantity = 260 × 14 = 3,640 m; usage variance = (3,640 − 3,710) × 7.50 [1] = 525 A [1]. [4] Examiner insight: Show the formula with numbers substituted, so that a slip in arithmetic still leaves a correct method visible.

4. (a) Actual rate = 25,935 ÷ 1,950 = 13.30. Rate = (13.50 − 13.30) × 1,950 [1] = 390 F [1]. Standard hours = 9,400 × 0.2 = 1,880; efficiency = (1,880 − 1,950) × 13.50 [1] = 945 A [1]. (b) Bakers took 70 hours more than standard [1]; this could be because newer, lower-paid bakers were less practised, which also fits the favourable rate variance [1]. [6] Examiner insight: Tie the cause to the data (extra hours, lower rate), not a stock phrase.

5. (a) Sales price = (255 − 240) × 840 [1] = 12,600 F [1]. Standard contribution = 240 − 150 = 90; sales volume = (840 − 900) × 90 [1] = 5,400 A [1]. (b) The two sales variances net to 12,600 − 5,400 = 7,200 F [1], so the rise added to profit despite the 60 lost sales, though the lost customers may matter in future periods [1]. [6] Examiner insight: Using the 240 selling price, rather than the 90 contribution, for the volume variance is a frequent error and overstates the loss.

6. (a) Standard hours = 2,000 × 0.75 = 1,500. Efficiency = (1,500 − 1,460) × 15.00 [1] = 600 F [1]. (b) Rate = total − efficiency = 495 A − 600 F = 1,095 A [1]. (c) 1,095 ÷ 1,460 = 0.75 more per hour than standard [1], so actual rate = 15.00 + 0.75 = 15.75 [1]. [5] Examiner insight: Treat adverse figures as negative when combining them; netting 600 against 495 to get 105 gives a wrong rate variance.

7. Trainees are paid less, giving the favourable rate variance of 2,880 [1]. They work more slowly, so more hours were needed than standard: the adverse efficiency variance [1]. Inexperience also leads to mistakes and wasted fabric, explaining the adverse materials usage [1]. Net effect: 2,880 − 3,520 − 1,140 = 1,780 A [1], so this month the change reduced profit [1]. But trainees should speed up and waste less with experience, so the change may pay off later if the trend improves [1]. [6] Examiner insight: An “assess” question needs a judgement backed by the net figure, and a point that looks beyond the current month.

8. (a) Actual price = 41,552 ÷ 8,480 = 4.90; price = (5.00 − 4.90) × 8,480 = 848 F [1]. Usage = (8,320 − 8,480) × 5.00 = 800 A [1]. Actual rate = 47,244 ÷ 2,540 = 18.60; rate = (18.00 − 18.60) × 2,540 = 1,524 A [1]. Efficiency = (2,600 − 2,540) × 18.00 = 1,080 F [1].

(b)

Hindlip Flasks: reconciliation of budgeted and actual cost	Dollars	Dollars
Budgeted cost (10,000 × 8.50)		85,000
Add: extra output of 400 flasks × 8.50		3,400
Standard cost of actual output (10,400 × 8.50)		88,400
Materials price	(848) F
Materials usage	800 A
Labour rate	1,524 A
Labour efficiency	(1,080) F
Net cost variances		396 A
Actual cost (41,552 + 47,244)		88,796

Volume adjustment of 3,400 [1]; standard cost of actual output 88,400 [1]; variances added if adverse and deducted if favourable, net 396 A [1]; actual cost 88,796 [1]. [8] Examiner insight: From 85,000, the four variances alone will not reach 88,796; show the output change first.

9. (a) Standard contribution = 380 − 72 − 90 = 218. Budgeted profit = 500 × 218 − 70,000 = 39,000 [1]. Revenue = 520 × 370 = 192,400; actual profit = 192,400 − 39,032 − 46,970 − 70,000 = 36,398 [1]. (b) Working: actual polymer price 39,032 ÷ 9,520 = 4.10; standard polymer 520 × 18 = 9,360 kg; actual rate 46,970 ÷ 3,050 = 15.40; standard hours 520 × 6 = 3,120. Sales price = (370 − 380) × 520 = 5,200 A [1]. Sales volume = (520 − 500) × 218 = 4,360 F [1]. Materials price = (4.00 − 4.10) × 9,520 = 952 A [1]. Materials usage = (9,360 − 9,520) × 4.00 = 640 A [1]. Labour rate = (15.00 − 15.40) × 3,050 = 1,220 A [1]. Labour efficiency = (3,120 − 3,050) × 15.00 = 1,050 F [1]. (c)

Glenarvon Kayaks: reconciliation of budgeted and actual profit	F	A	Dollars
Budgeted profit			39,000
Sales price		5,200
Sales volume	4,360
Materials price		952
Materials usage		640
Labour rate		1,220
Labour efficiency	1,050
Totals	5,410	8,012	2,602 A
Actual profit			36,398

Starts from budgeted profit [1]; favourable variances added [1]; adverse variances deducted [1]; ends on actual profit 36,398 [1]. [12] Examiner insight: Work out actual profit separately first; if your statement does not reach it, a variance has the wrong sign or value.

10. For: each manager gets a clear, measurable target [1], which may push the buyer to negotiate harder [1] and the supervisor to cut idle time [1]. Both variances are within the control of the person being rewarded, so the scheme matches standard costing’s aim of responsibility [1].

Against: the buyer could earn a bonus by buying cheaper, lower-grade material [1], which raises materials usage and slows labour, creating adverse variances that cost more than the saving [1]. The supervisor might rush work to save hours, increasing waste or rejects and damaging quality [1], and sales volume could fall if customers receive faulty pumps [1]. Out-of-date or slack standards could earn bonuses for no real improvement [1]. Rewarding favourable variances with no penalty for knock-on effects encourages each manager to protect their own figure [1].

Judgement: the proposal should not go ahead in this form [1]. A better scheme would base bonuses on the net total of related variances or on overall profit, with quality checks and regularly updated standards [1]. [12] Examiner insight: Extended writing needs both sides, specific variance links and a supported conclusion.

Where marks are usually lost

• Basing standard kilograms or standard hours on the budget’s output level.
• Putting actual prices or pay rates into the usage or efficiency formula.
• Leaving variances unlabelled, or calling a cost saving adverse.
• Valuing sales volume at selling price instead of standard contribution.
• Adding adverse variances to budgeted profit.
• Leaving out the volume adjustment in a cost reconciliation.
• Evaluations with no final judgement.

Next steps

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Official syllabus

OxfordAQA International AS and A-level Accounting (9615) specification, Version 1.2, for International AS exams May/June 2025 onwards and International A-level exams May/June 2026 onwards, published by OxfordAQA. Section 3.2.1, Standard costing and variance analysis.