This chapter-wise practice test covers Chapter 13: Standard Costing - Test 1 for CA Intermediate Group 2 students preparing for the January 2027 examination attempt. It carries 50 marks across 25 questions in case scenarios and standalone practical MCQs with a time limit of 60 minutes and no negative marking.
25 questions across 1 chapter, 50 marks and 60 minutes in the timed paper. Every answer below is shown with the working behind it and the authority it rests on.
Law and standards used: ICAI Study Material for CA Intermediate Paper 4: Cost and Management Accounting (relevant for 2027 attempt).
Questions
25
Marks
50
Time limit
60 minutes
Attempt
January 2027
Group
Group 2
Law basis
ICAI Study Material for CA Intermediate Paper 4: Cost and Management Accounting (relevant for 2027 attempt)
Content as of
2026-11-10
Chapters covered
Chapter 13: Standard Costing (25 Q)
Questions, answers and explanations
Question 1 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. Vikram Steel Components Ltd. manufactures pressed chassis brackets supplied to commercial-vehicle assemblers. The plant operates two shifts on a dedicated press line. Its rated monthly capacity is 5,000 good brackets, but customer schedules required only 4,000 brackets in October 2026. The line recorded 212 productive machine-hours. The standard bill of material, approved after trial runs, allows 2.50 kg of steel coil for each good bracket at a standard price of ₹80 per kg. The 2.50 kg allowance already includes normal process scrap expected in routine stamping; no separate normal-loss adjustment is to be made while computing the standard quantity for actual output.
Standard data:
Material | Standard quantity per good bracket | Standard price
Steel coil | 2.50 kg | ₹80 per kg
For October, quality inspection accepted 4,000 brackets. Stores and production records confirm that 10,800 kg of steel coil were purchased and the entire quantity was issued and consumed during the month. There was no opening or closing stock of this steel, no return to stores and no recoverable scrap credited against material cost. The supplier's invoice rate, on the same cost basis as the standard price, was ₹82 per kg. Actual material expenditure was therefore ₹8,85,600 (10,800 kg × ₹82).
The production manager attributes the higher usage to coil-width changes and additional trimming, while procurement reports that the purchase-price increase arose from a short-term market movement. Treat these explanations as background only: compute variances from the numerical information and do not assume that a variance is controllable merely because a department is mentioned. All quantities are in kilograms and all monetary figures are in rupees. Since purchases equal consumption, the price and usage components can be reconciled directly to material cost variance.
What is the standard material cost for the actual production of 4,000 good brackets?
₹8,00,000 (correct answer)
₹8,32,000
₹8,64,000
₹8,85,600
Answer: A — ₹8,00,000
Explanation. Standard quantity for actual output = 4,000 brackets × 2.50 kg = 10,000 kg. Standard material cost = 10,000 kg × ₹80 = ₹8,00,000. The 2.50 kg standard already includes normal stamping scrap, so it must not be grossed up again. Option b adds an unsupported scrap allowance; option c values actual input at standard price; option d uses actual price and actual quantity rather than the standard cost for actual output.
Where it goes wrong. Applying an additional normal-loss percentage even though the standard per-unit quantity already includes normal scrap.
Question 2 · 2 marks · Chapter 13: Standard Costing · hard
What is the Material Price Variance for October 2026?
₹21,600 (F)
₹64,000 (A)
₹21,600 (A) (correct answer)
₹85,600 (A)
Answer: C — ₹21,600 (A)
Explanation. Material Price Variance = actual purchase quantity × (standard price − actual price). Here, 10,800 kg × (₹80 − ₹82) = −₹21,600, hence ₹21,600 adverse. Purchases equal consumption, so the full 10,800 kg is used for the price variance. Option b is the usage variance, while option d is the total material cost variance; option a has the wrong favourable/adverse direction.
Where it goes wrong. Using standard quantity for actual output instead of actual purchase quantity, or reversing the adverse sign when actual price exceeds standard price.
Question 3 · 2 marks · Chapter 13: Standard Costing · medium
What is the Material Usage Variance for the month?
₹21,600 (A)
₹64,000 (A) (correct answer)
₹64,000 (F)
₹85,600 (A)
Answer: B — ₹64,000 (A)
Explanation. Standard quantity for 4,000 good brackets is 4,000 × 2.50 = 10,000 kg. Actual quantity consumed is 10,800 kg. Material Usage Variance = (SQ − AQ) × SP = (10,000 − 10,800) × ₹80 = −₹64,000, or ₹64,000 adverse. Option a is the price variance, option d combines price and usage variances, and option c incorrectly labels excess consumption as favourable.
Where it goes wrong. Using the actual price in the usage variance, or treating consumption above standard quantity as favourable.
Explanation. Standard cost for actual output is ₹8,00,000. Actual cost is 10,800 kg × ₹82 = ₹8,85,600. Therefore MCV = ₹8,00,000 − ₹8,85,600 = ₹85,600 adverse. The check is MPV ₹21,600 adverse plus MUV ₹64,000 adverse, also ₹85,600 adverse. Options a, b and c either omit a component or confuse one component with the total variance.
Where it goes wrong. Reporting only one component variance as the total, instead of checking that MCV equals MPV plus MUV when purchases equal consumption.
Question 5 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. Apex Polychem Ltd. manufactures polymer compound P by blending Resin R and Stabiliser S in a continuous mixing line. The line can produce 2,200 kg of accepted compound in a month; in October 2026 it recorded 172 mixer-hours and produced 1,800 kg of good compound. The approved standard formulation specifies R and S as percentages of total material input, not percentages of finished output. Normal process loss is 10% of total input, so the standard input required for a given good output must be grossed up for a 90% yield.
Standard formulation:
Material | Standard mix | Standard price
Resin R | 60% | ₹50 per kg
Stabiliser S | 40% | ₹30 per kg
Normal process loss | 10% of total input | —
During the month, production issued 1,270 kg of R and 800 kg of S. The quantities were purchased and consumed in the same month; there was no opening or closing stock, return to stores, or separate recoverable scrap credit. R was purchased at ₹52 per kg and S at ₹29 per kg. Actual material expenditure was ₹89,240: ₹66,040 for R and ₹23,200 for S. The quality team recorded the accepted 1,800 kg after processing, so the actual input quantity is 2,070 kg and the difference is attributable to actual yield and mix, not to an unrecorded stock movement.
For the mix and yield calculations, first determine the standard input quantities for actual good output. Then calculate revised standard quantities by applying the standard proportions to the total actual input of both materials. Use standard prices for usage, mix and yield variances, and actual purchase prices for the price variance. All figures relate to the same accounting period and should be treated as precise.
What is the total standard input required to produce the actual good output of 1,800 kg, after allowing for the standard process loss?
1,800 kg
2,000 kg (correct answer)
2,070 kg
2,200 kg
Answer: B — 2,000 kg
Explanation. Normal loss is 10% of total input, so standard yield is 90% of input. Standard input required = 1,800 kg × 100/90 = 2,000 kg. The 1,800 kg figure is finished output, not input; 2,070 kg is actual input; and 2,200 kg is the line's monthly capacity, which is unrelated to the standard input calculation. The loss is applied once to gross up input.
Where it goes wrong. Adding 10% of output to the output figure instead of grossing up by dividing by the 90% standard yield.
Question 6 · 2 marks · Chapter 13: Standard Costing · hard
What are the Revised Standard Quantities (RSQ) of Resin R and Stabiliser S for the actual total input?
R 1,200 kg; S 800 kg
R 1,270 kg; S 800 kg
R 1,242 kg; S 800 kg
R 1,242 kg; S 828 kg (correct answer)
Answer: D — R 1,242 kg; S 828 kg
Explanation. Actual total input = 1,270 + 800 = 2,070 kg. RSQ is this total recast in standard proportions: R = 2,070 × 60% = 1,242 kg; S = 2,070 × 40% = 828 kg. Option a gives SQ for actual output, option b repeats actual quantities, and option c applies the 60:40 ratio only to R while leaving S at its actual quantity. RSQ must total 2,070 kg.
Where it goes wrong. Confusing standard quantities for actual output with revised standard quantities for the actual total input.
Question 7 · 2 marks · Chapter 13: Standard Costing · medium
What is the Material Mix Variance for the two materials?
₹560 (A) (correct answer)
₹560 (F)
₹2,240 (A)
₹3,500 (A)
Answer: A — ₹560 (A)
Explanation. MMV = Σ[(RSQ − AQ) × SP]. For R: (1,242 − 1,270) × ₹50 = ₹1,400 adverse. For S: (828 − 800) × ₹30 = ₹840 favourable. Net MMV = ₹1,400 adverse − ₹840 favourable = ₹560 adverse. Option c adds the absolute variances without offsetting them; option d is the total usage variance; option b reverses the net direction.
Where it goes wrong. Adding the absolute material-wise mix variances instead of netting favourable and adverse components.
Question 8 · 2 marks · Chapter 13: Standard Costing · hard
What is the Material Yield Variance (also described in the chapter as Material Sub-usage Variance)?
₹560 (A)
₹3,500 (A)
₹2,940 (A) (correct answer)
₹2,940 (F)
Answer: C — ₹2,940 (A)
Explanation. MYV = Σ[(SQ − RSQ) × SP]. For R: (1,200 − 1,242) × ₹50 = ₹2,100 adverse. For S: (800 − 828) × ₹30 = ₹840 adverse. Total yield variance = ₹2,940 adverse. It measures the effect of the actual total input differing from the standard input for actual output, after mix is neutralised. Option b is total usage variance; option a is mix variance in magnitude.
Where it goes wrong. Calculating yield variance against actual quantities rather than revised standard quantities, thereby mixing the mix effect into yield.
Question 9 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. Zenith Consumer Care Ltd. manufactures a plant-based surface-cleanser concentrate using three direct materials: Active Concentrate A, Surfactant Base B and Conditioning Agent C. Its blending line has a monthly capacity of 2,500 kg of accepted concentrate. In November 2026, the line worked 190 mixing-hours and produced 2,160 kg of accepted output. The standard process allows a normal loss of 10% of total input. The specified percentages below are the proportions of total input before that loss; they are not proportions of the finished output.
Standard formulation:
Material | Standard mix | Standard price
Active Concentrate A | 50% | ₹24 per kg
Surfactant Base B | 30% | ₹18 per kg
Conditioning Agent C | 20% | ₹12 per kg
Normal process loss | 10% of total input | —
Actual issue records show 1,270 kg of A, 700 kg of B and 490 kg of C. The respective actual purchase prices were ₹25, ₹17 and ₹13 per kg. All materials purchased during the period were consumed; there was no opening or closing inventory, no return to stores and no scrap recovery. Actual expenditure was ₹50,020, comprising ₹31,750 for A, ₹11,900 for B and ₹6,370 for C. Production records reconcile the total actual input of 2,460 kg to the 2,160 kg of accepted output and normal/abnormal process loss.
For each material, calculate standard quantity for actual output after allowing for the standard loss. The revised standard quantity must then be calculated by spreading total actual input across A, B and C in the standard 50:30:20 proportions. Calculate mix and yield variances at standard prices; the price variance uses actual purchase quantity, which here equals actual consumption. Amounts are in rupees and quantities are in kilograms.
What is the total standard input quantity required for 2,160 kg of accepted output?
2,160 kg
2,376 kg
2,460 kg
2,400 kg (correct answer)
Answer: D — 2,400 kg
Explanation. The standard process loss is 10% of total input, leaving a standard yield of 90%. Standard input = 2,160 kg × 100/90 = 2,400 kg. Option a treats output as input and ignores normal loss; option b adds 10% of output rather than grossing up; option c is the actual input quantity, not the standard quantity for actual output. The standard mix is then applied to 2,400 kg.
Where it goes wrong. Applying the loss percentage to finished output instead of treating it as a percentage of total input.
Question 10 · 2 marks · Chapter 13: Standard Costing · hard
What are the Revised Standard Quantities of materials A, B and C, respectively?
1,200 kg; 720 kg; 480 kg
1,230 kg; 738 kg; 492 kg (correct answer)
1,270 kg; 700 kg; 490 kg
1,260 kg; 738 kg; 462 kg
Answer: B — 1,230 kg; 738 kg; 492 kg
Explanation. Total actual input = 1,270 + 700 + 490 = 2,460 kg. Apply the standard mix to this total: A = 2,460 × 50% = 1,230 kg; B = 2,460 × 30% = 738 kg; C = 2,460 × 20% = 492 kg. These revised quantities total 2,460 kg. Option a is the standard quantity for actual output, option c is actual mix, and option d applies an incorrect percentage split.
Where it goes wrong. Using actual output to determine RSQ instead of the total actual quantity of all materials consumed.
Question 11 · 2 marks · Chapter 13: Standard Costing · medium
Calculate the aggregate Material Mix Variance for materials A, B and C.
₹1,440 (A)
₹252 (F)
₹252 (A) (correct answer)
₹1,188 (A)
Answer: C — ₹252 (A)
Explanation. Using MMV = Σ[(RSQ − AQ) × SP]: A = (1,230 − 1,270) × ₹24 = ₹960 adverse; B = (738 − 700) × ₹18 = ₹684 favourable; C = (492 − 490) × ₹12 = ₹24 favourable. Net variance = ₹960 adverse − ₹684 favourable − ₹24 favourable = ₹252 adverse. Option a is total usage variance; option d is yield variance. The favourable components reduce, rather than increase, the net adverse amount.
Where it goes wrong. Failing to offset the favourable mix effects in B and C against the adverse mix effect in A.
Question 12 · 2 marks · Chapter 13: Standard Costing · hard
Calculate the aggregate Material Yield Variance for the period.
₹1,188 (A) (correct answer)
₹252 (A)
₹1,440 (A)
₹1,188 (F)
Answer: A — ₹1,188 (A)
Explanation. MYV = Σ[(SQ − RSQ) × SP]. A: (1,200 − 1,230) × ₹24 = ₹720 adverse. B: (720 − 738) × ₹18 = ₹324 adverse. C: (480 − 492) × ₹12 = ₹144 adverse. Total = ₹1,188 adverse. Option b is the mix variance, option c is total usage variance, and option d reverses the direction despite actual total input exceeding standard input.
Where it goes wrong. Using actual quantities directly in the yield calculation or reversing the adverse sign when revised quantities exceed standard quantities.
Question 13 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. A product has a standard material requirement of 4 kg per unit at ₹25 per kg. Actual output is 3,000 units; actual material consumed is 12,600 kg at ₹24.50 per kg. What is the Material Cost Variance?
A product has a standard material requirement of 4 kg per unit at ₹25 per kg. Actual output is 3,000 units; actual material consumed is 12,600 kg at ₹24.50 per kg. What is the Material Cost Variance?
₹8,700 (F)
₹15,000 (A)
₹8,700 (A) (correct answer)
₹6,300 (F)
Answer: C — ₹8,700 (A)
Explanation. Standard quantity = 3,000 × 4 = 12,000 kg; standard cost = 12,000 × ₹25 = ₹3,00,000. Actual cost = 12,600 × ₹24.50 = ₹3,08,700. MCV = ₹3,00,000 − ₹3,08,700 = ₹8,700 adverse. The price variance is ₹6,300 favourable, but the ₹15,000 adverse usage variance is larger, producing a net adverse result. Option d reports only the price component.
Where it goes wrong. Considering the favourable price variance alone and overlooking the larger adverse usage variance.
Question 14 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. A blend has a standard mix of Material X 40% at ₹10 per kg and Material Y 60% at ₹20 per kg. Actual input is 450 kg of X and 550 kg of Y. What is the Material Mix Variance?
A blend has a standard mix of Material X 40% at ₹10 per kg and Material Y 60% at ₹20 per kg. Actual input is 450 kg of X and 550 kg of Y. What is the Material Mix Variance?
₹500 (A)
₹1,500 (F)
₹1,500 (A)
₹500 (F) (correct answer)
Answer: D — ₹500 (F)
Explanation. Total actual input is 1,000 kg. Revised standard quantities are X 400 kg and Y 600 kg. MMV for X = (400 − 450) × ₹10 = ₹500 adverse. For Y = (600 − 550) × ₹20 = ₹1,000 favourable. Net MMV is ₹500 favourable. Option b adds the absolute values; option a ignores the larger favourable offset; option c also overstates the net adverse effect.
Where it goes wrong. Applying the standard proportions to output or failing to offset the adverse variance in one material against the favourable variance in the other.
Question 15 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. A product's standard material is 3 kg per unit at ₹12 per kg. For actual output of 5,000 units, 15,600 kg were consumed. Material Cost Variance is ₹22,800 adverse and Material Price Variance is ₹15,600 adverse. What was the actual price per kg?
A product's standard material is 3 kg per unit at ₹12 per kg. For actual output of 5,000 units, 15,600 kg were consumed. Material Cost Variance is ₹22,800 adverse and Material Price Variance is ₹15,600 adverse. What was the actual price per kg?
₹12.00
₹13.00 (correct answer)
₹12.50
₹14.00
Answer: B — ₹13.00
Explanation. Standard quantity = 5,000 × 3 = 15,000 kg. MUV = MCV − MPV = ₹22,800 A − ₹15,600 A = ₹7,200 A, which agrees with (15,000 − 15,600) × ₹12. For MPV, 15,600 × (₹12 − AP) = −₹15,600; hence ₹12 − AP = −₹1 and AP = ₹13. Option a is the standard price, not the actual price.
Where it goes wrong. Treating the material cost variance as the price variance, or using standard quantity rather than actual quantity in the price-variance equation.
Question 16 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. A factory produced 1,280 units, with a standard material requirement of 4 kg per unit at ₹40 per kg. Opening stock was 600 kg valued at standard price; 5,000 kg were purchased at ₹42 per kg; closing stock was 400 kg valued at standard price. What is the Material Cost Variance?
A factory produced 1,280 units, with a standard material requirement of 4 kg per unit at ₹40 per kg. Opening stock was 600 kg valued at standard price; 5,000 kg were purchased at ₹42 per kg; closing stock was 400 kg valued at standard price. What is the Material Cost Variance?
₹13,200 (A) (correct answer)
₹10,000 (A)
₹3,200 (A)
₹13,200 (F)
Answer: A — ₹13,200 (A)
Explanation. Standard quantity = 1,280 × 4 = 5,120 kg; standard cost = 5,120 × ₹40 = ₹2,04,800. Actual consumption = 600 + 5,000 − 400 = 5,200 kg. Actual cost consumed = 600 × ₹40 + 5,000 × ₹42 − 400 × ₹40 = ₹2,18,000. MCV = ₹2,04,800 − ₹2,18,000 = ₹13,200 adverse. It also reconciles to MPV ₹10,000 A plus MUV ₹3,200 A.
Where it goes wrong. Ignoring opening and closing stocks, or valuing the standard-priced stock movement at the supplier's actual purchase price.
Question 17 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. A chemical blend has a standard input mix of A 70% and B 30%, with standard prices of ₹25 and ₹40 per kg, respectively. Standard process loss is 20%. Actual good output is 1,600 kg; actual input was 1,450 kg of A and 650 kg of B. What is the Material Yield Variance?
A chemical blend has a standard input mix of A 70% and B 30%, with standard prices of ₹25 and ₹40 per kg, respectively. Standard process loss is 20%. Actual good output is 1,600 kg; actual input was 1,450 kg of A and 650 kg of B. What is the Material Yield Variance?
₹3,250 (A)
₹300 (A)
₹2,950 (F)
₹2,950 (A) (correct answer)
Answer: D — ₹2,950 (A)
Explanation. Standard input for 1,600 kg good output = 1,600 × 100/80 = 2,000 kg. Thus SQ is A 1,400 kg and B 600 kg. Actual total input is 2,100 kg, so RSQ is A 1,470 kg and B 630 kg. MYV = (1,400 − 1,470) × ₹25 + (600 − 630) × ₹40 = ₹1,750 A + ₹1,200 A = ₹2,950 adverse. Option a is total usage variance, not yield variance.
Where it goes wrong. Using actual quantities instead of revised standard quantities to isolate the yield effect from the mix effect.
Question 18 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. A process has a standard material mix of A 50%, B 30% and C 20%, with a normal loss of 10% of total input. If actual good output is 2,700 kg, what is the standard quantity of Material C for actual output?
A process has a standard material mix of A 50%, B 30% and C 20%, with a normal loss of 10% of total input. If actual good output is 2,700 kg, what is the standard quantity of Material C for actual output?
540 kg
600 kg (correct answer)
675 kg
660 kg
Answer: B — 600 kg
Explanation. A 10% normal loss means standard yield is 90% of total input. Total standard input for 2,700 kg output = 2,700 × 100/90 = 3,000 kg. Material C is 20% of that input, so SQ of C = 3,000 × 20% = 600 kg. Option a applies the mix directly to output, while option c incorrectly uses a 25% share. The mix percentages apply to input before loss.
Where it goes wrong. Applying the material proportion to finished output rather than to the gross standard input required after allowing for normal loss.
Question 19 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. For a period, Material Mix Variance is ₹180 favourable, Material Yield Variance is ₹720 adverse and Material Price Variance is ₹450 adverse. Assuming actual purchase quantity equals actual consumption, what is the Material Cost Variance?
For a period, Material Mix Variance is ₹180 favourable, Material Yield Variance is ₹720 adverse and Material Price Variance is ₹450 adverse. Assuming actual purchase quantity equals actual consumption, what is the Material Cost Variance?
₹1,350 (A)
₹990 (F)
₹990 (A) (correct answer)
₹1,350 (F)
Answer: C — ₹990 (A)
Explanation. Material Usage Variance = MMV + MYV = ₹180 favourable offset against ₹720 adverse = ₹540 adverse. Material Cost Variance = MPV + MUV = ₹450 adverse + ₹540 adverse = ₹990 adverse. Option a incorrectly adds the magnitudes of the mix and yield variances without netting the favourable amount. Option b reverses the final direction, while option d combines the components with the wrong signs.
Where it goes wrong. Adding favourable and adverse variances as unsigned amounts instead of reconciling them with their correct directions.
Question 20 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. The standard quantity for actual output is 8,000 kg and standard price is ₹18 per kg. Actual purchases and consumption are equal. Material Usage Variance is ₹7,200 adverse and Material Price Variance is ₹12,600 adverse. What is the actual purchase price per kg?
The standard quantity for actual output is 8,000 kg and standard price is ₹18 per kg. Actual purchases and consumption are equal. Material Usage Variance is ₹7,200 adverse and Material Price Variance is ₹12,600 adverse. What is the actual purchase price per kg?
₹19.50 (correct answer)
₹19.00
₹18.75
₹20.00
Answer: A — ₹19.50
Explanation. From MUV = (SQ − AQ) × SP, −₹7,200 = (8,000 − AQ) × ₹18; therefore AQ = 8,400 kg. MPV = AQ × (SP − AP), so −₹12,600 = 8,400 × (₹18 − AP). Dividing gives ₹18 − AP = −₹1.50, hence AP = ₹19.50 per kg. Option b uses an incorrect quantity or variance base; the actual quantity must first be solved from MUV.
Where it goes wrong. Trying to derive actual price from the price variance before solving the actual quantity required for its calculation.
Question 21 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. Materials A and B have a standard mix of 25% and 75%, with standard prices of ₹60 and ₹20 per kg. Actual total input is 1,200 kg and the aggregate Material Mix Variance is ₹3,600 adverse. What is the actual quantity of Material A?
Materials A and B have a standard mix of 25% and 75%, with standard prices of ₹60 and ₹20 per kg. Actual total input is 1,200 kg and the aggregate Material Mix Variance is ₹3,600 adverse. What is the actual quantity of Material A?
300 kg
360 kg
450 kg
390 kg (correct answer)
Answer: D — 390 kg
Explanation. RSQ is A 300 kg and B 900 kg. Let actual A be x kg; actual B is (1,200 − x) kg. MMV = (300 − x) × ₹60 + [900 − (1,200 − x)] × ₹20. This simplifies to ₹12,000 − ₹40x. Set the signed variance to −₹3,600: x = 390 kg. Option a is RSQ, not actual quantity; option c overstates A and creates a larger adverse mix variance.
Where it goes wrong. Treating revised standard quantity as actual quantity, or solving the variance equation without preserving the adverse sign.
Question 22 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. A material has a standard price of ₹48 per kg. During the month, 2,500 kg were purchased at ₹50 per kg, while only 2,300 kg were consumed. What is the Material Price Variance on the purchase basis prescribed for prompt variance reporting?
A material has a standard price of ₹48 per kg. During the month, 2,500 kg were purchased at ₹50 per kg, while only 2,300 kg were consumed. What is the Material Price Variance on the purchase basis prescribed for prompt variance reporting?
₹4,600 (A)
₹5,000 (A) (correct answer)
₹5,000 (F)
₹9,600 (A)
Answer: B — ₹5,000 (A)
Explanation. The chapter computes Material Price Variance on actual quantity purchased so that the purchasing price difference is reported promptly. MPV = 2,500 kg × (₹48 − ₹50) = ₹5,000 adverse. Option a applies the 2,300 kg consumed rather than purchased; option c reverses the sign; option d incorrectly adds purchase and consumption quantities. The 200 kg stock movement does not change the purchase-basis price variance.
Where it goes wrong. Using material consumed instead of material purchased when the question expressly asks for purchase-basis price variance.
Question 23 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. A process uses materials A and B in a standard mix of 40% and 60%, with standard prices of ₹16 and ₹24 per kg. Standard input for 85 kg of good output is 100 kg. Actual good output is 1,020 kg; actual consumption is 500 kg of A and 760 kg of B. What is the Material Usage Variance?
A process uses materials A and B in a standard mix of 40% and 60%, with standard prices of ₹16 and ₹24 per kg. Standard input for 85 kg of good output is 100 kg. Actual good output is 1,020 kg; actual consumption is 500 kg of A and 760 kg of B. What is the Material Usage Variance?
₹1,248 (A)
₹32 (A)
₹1,280 (A) (correct answer)
₹1,280 (F)
Answer: C — ₹1,280 (A)
Explanation. Standard input for actual output = 1,020 × 100/85 = 1,200 kg. Therefore SQ is A 480 kg and B 720 kg. MUV = (480 − 500) × ₹16 + (720 − 760) × ₹24 = ₹320 adverse + ₹960 adverse = ₹1,280 adverse. Option a is the yield component and option b is the mix component; together they reconcile to ₹1,280 adverse. Option d reverses the direction.
Where it goes wrong. Reporting only the yield or mix sub-variance instead of total usage variance, which includes both effects.
Question 24 · 2 marks · Chapter 13: Standard Costing · hard
Scenario. For actual output, standard material quantity is 5,000 kg at ₹30 per kg. Material Cost Variance is ₹7,200 adverse and Material Price Variance is ₹4,800 adverse. Actual purchase quantity equals actual consumption. What was the actual quantity consumed?
For actual output, standard material quantity is 5,000 kg at ₹30 per kg. Material Cost Variance is ₹7,200 adverse and Material Price Variance is ₹4,800 adverse. Actual purchase quantity equals actual consumption. What was the actual quantity consumed?
5,080 kg (correct answer)
4,920 kg
5,160 kg
5,000 kg
Answer: A — 5,080 kg
Explanation. MUV = MCV − MPV = ₹7,200 adverse − ₹4,800 adverse = ₹2,400 adverse. Using MUV = (SQ − AQ) × SP: −₹2,400 = (5,000 − AQ) × ₹30. Thus 5,000 − AQ = −80 and AQ = 5,080 kg. Option d assumes no usage variance; option b gives a favourable usage variance; option c overstates the excess quantity by 80 kg.
Where it goes wrong. Subtracting variance magnitudes without first identifying that both given variances are adverse, or reversing the usage-variance formula.
Question 25 · 2 marks · Chapter 13: Standard Costing · medium
Scenario. A product's standard input is 2,000 kg, comprising A 30% at ₹40 per kg and B 70% at ₹20 per kg. Actual consumption is 650 kg of A at ₹42 and 1,450 kg of B at ₹19. What is the total Material Cost Variance?
A product's standard input is 2,000 kg, comprising A 30% at ₹40 per kg and B 70% at ₹20 per kg. Actual consumption is 650 kg of A at ₹42 and 1,450 kg of B at ₹19. What is the total Material Cost Variance?
₹3,150 (A)
₹150 (F)
₹3,000 (A)
₹2,850 (A) (correct answer)
Answer: D — ₹2,850 (A)
Explanation. Standard quantities are A 600 kg and B 1,400 kg; standard cost = 600 × ₹40 + 1,400 × ₹20 = ₹52,000. Actual cost = 650 × ₹42 + 1,450 × ₹19 = ₹54,850. MCV = ₹52,000 − ₹54,850 = ₹2,850 adverse. Check: MPV is ₹150 favourable and MUV is ₹3,000 adverse, giving net ₹2,850 adverse. Option c omits the favourable price offset.
Where it goes wrong. Adding the adverse usage variance to the absolute price variance without recognising that the price variance is favourable overall.
ICAI SM: Cost and Management Accounting, Chapter 13 (Standard Costing)
Questions people ask
What does this Chapter 13: Standard Costing - Test 1 practice test cover?
This practice test carries 50 marks across 25 questions covering core costing principles, cost accounting standards, formulas, mathematical models, and practical ICAI case scenarios.
How many questions are there and what is the time limit?
There are 25 questions carrying 2 marks each, giving a maximum score of 50 marks in 60 minutes with no negative marking.
Which study material and syllabus apply to these questions?
Questions strictly reflect the official ICAI Study Material for CA Intermediate Paper 4 Cost and Management Accounting for the 2027 examination sessions.
Can I sit this test in both exam and practice modes?
Yes. Practice mode gives immediate answers with mathematical step-by-step workings and trap explanations after each question. Exam mode simulates actual exam conditions with a live timer and issues a downloadable performance certificate.
