Question 1

The labor rate variance is computed by

Accepted Answer

A) (Actual Rate ´ Actual Hours)- (Standard Rate ´ Standard Hours). 
B) (Standard Rate ´ Actual Rate)- (Actual Rate ´ Actual Hours). 
C) (Actual Rate ´ Standard Hours)- (Standard Rate ´ Actual Hours). 
D) (Actual Rate ´ Actual Hours)- (Standard Rate ´ Actual Hours). 
E) none of these. 
A) (Actual Rate ´ Actual Hours)- (Standard Rate ´ Standard Hours). 
B) (Standard Rate ´ Actual Rate)- (Actual Rate ´ Actual Hours). 
C) (Actual Rate ´ Standard Hours)- (Standard Rate ´ Actual Hours). 
D) (Actual Rate ´ Actual Hours)- (Standard Rate ´ Actual Hours). 
E) none of these.

Question 2

Claire Company uses a standard costing system.The following information pertains to direct labor costs for February:   How many actual labor hours were worked during February for Claire Company?

Accepted Answer

A) 10,000 hours 
B) 2,000 hours 
C) 1,200 hours 
D) 12,000 hours 
A) 10,000 hours 
B) 2,000 hours 
C) 1,200 hours 
D) 12,000 hours

Question 3

Figure 10-3. Bortello Corporation produces high-quality leather boots.The company has a standard cost system and has set the following standards for materials and labor:
  During the year Bortello produced 125 boots.Actual leather purchased was 1,700 strips,at $16 per strip.There were no beginning or ending inventories of leather.Actual direct labor was 1,500 hours at $15 per hour.
Refer to Figure 10-3.Compute the costs of leather and direct labor that should have been incurred for the production of 125 boots.

Accepted Answer

A) $36,000 and $36,000 
B) $46,500 and $37,500 
C) $37,200 and $20,000 
D) $30,000 and $15,000 
A) $36,000 and $36,000 
B) $46,500 and $37,500 
C) $37,200 and $20,000 
D) $30,000 and $15,000

Question 4

Assume that SQ = Standard Quantity,SP = Standard Price,AQ = Actual Quantity,and AP = Actual Price.The correct entry along with the equation to record the issuance and usage of materials,assuming a favorable materials usage variance,is as follows

Accepted Answer

A) Work in Process SQ ´ SP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP 
B) Work in Process SQ ´ SP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP, 
C) Work in Process AQ ´ AP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP. 
D) Work in Process AQ ´ AP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP, 
E) None of these. 
A) Work in Process SQ ´ SP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP 
B) Work in Process SQ ´ SP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP, 
C) Work in Process AQ ´ AP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP. 
D) Work in Process AQ ´ AP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP, 
E) None of these.

Question 5

Standard cost systems are adopted

Accepted Answer

A) to improve planning and control. 
B) to facilitate product costing. 
C) to improve planning and control,and to facilitate product costing. 
D) to enhance the operational control of firms that emphasize continuous improvement. 
E) for all of these reasons. 
A) to improve planning and control. 
B) to facilitate product costing. 
C) to improve planning and control,and to facilitate product costing. 
D) to enhance the operational control of firms that emphasize continuous improvement. 
E) for all of these reasons.

Question 6

Which of the following is not true about Kaizen Standards?

Accepted Answer

A) Kaizen standards are the standards used for continuous improvement. 
B) Kaizen standards are a currently attainable standard that reflects planned improvement. 
C) Kaizen standards are constantly changing. 
D) Kaizen standards are the standards used in traditional costing systems. 
A) Kaizen standards are the standards used for continuous improvement. 
B) Kaizen standards are a currently attainable standard that reflects planned improvement. 
C) Kaizen standards are constantly changing. 
D) Kaizen standards are the standards used in traditional costing systems.

Question 7

Figure 10-1. Flying High Company manufactures model airplanes.During the month,it manufactured 10,000 airplanes.Each one used an average of 6.5 direct labor hours and an average of 1.5 sheets of aluminum.It normally manufactures 7,500 airplanes.Materials and labor standards for making the airplanes are:
  Refer to Figure 10-1.Compute the standard hours allowed for a volume of 10,000 airplanes.

Accepted Answer

A) 60,000 hours 
B) 420,000 hours 
C) 70,000 hours 
D) 65,000 hours 
A) 60,000 hours 
B) 420,000 hours 
C) 70,000 hours 
D) 65,000 hours

Question 8

Figure 10-8. The Perfect Tool Company (South America Division)produced 80,000 saw blades during the year.It took 1.5 hours of labor per blade at a rate of $8.50 per hour.However,its standard labor rate is $8.00.Its labor efficiency variance was an unfavorable $40,000.
Refer to Figure 10-8.What is Perfect's standard hours allowed for a volume of 80,000 blades?

Accepted Answer

A) 210,000 hours 
B) 189,000 hours 
C) 115,000 hours 
D) 125,000 hours 
A) 210,000 hours 
B) 189,000 hours 
C) 115,000 hours 
D) 125,000 hours

Question 9

During September,a small roofing company purchased 500 bundles of a certain type of shingle at a price of $35 per bundle,$5 less than the standard price.Its standard quantity of this type of shingle is 550 bundles.What is the journal entry to record the purchase of materials?

Accepted Answer

A) Materials 20,000 Materials Price Variance 2,500
Accounts Payable 17,500 
B) Materials 20,000 Materials Price Variance 2,500
Accounts Payable 22,500 
C) Materials 17,500 Materials Price Variance 2,500
Accounts Payable 15,000 
D) Materials 20,000 Materials Price Variance 2,750
Accounts Payable 17,250 
A) Materials 20,000 Materials Price Variance 2,500
Accounts Payable 17,500 
B) Materials 20,000 Materials Price Variance 2,500
Accounts Payable 22,500 
C) Materials 17,500 Materials Price Variance 2,500
Accounts Payable 15,000 
D) Materials 20,000 Materials Price Variance 2,750
Accounts Payable 17,250

Question 10

Figure 10-9. James Company manufactures t-shirts.During the year,it manufactured 250,000 t-shirts,using 2 hours of direct labor at a rate of $8.50 per hour.The materials and labor standards for manufacturing the t-shirts are:
  It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts.
Refer to Figure 10-9.What is James' labor efficiency variance?

Accepted Answer

A) $800,000 U 
B) $850,000 F 
C) $800,000 F 
D) $850,000 U 
A) $800,000 U 
B) $850,000 F 
C) $800,000 F 
D) $850,000 U

Question 11

The standard cost per unit of output for a particular input is calculated by multiplying the standard input price by the standard input allowed per unit of output produced.

Accepted Answer

A) True 
 B)False

Question 12

Stratford Company inspects every steam iron it manufactures for safety issues.The standard labor cost is $12 per hour.The maintenance standard at the beginning of the first quarter is 20 minutes per iron.Stratford is implementing a new production process that will aid in reducing any potential electrical defects in the irons.This will decrease the inspection time to 15 minutes per iron.After the end of the first quarter,the new process had reduced the inspection time per iron from 20 minutes to 14 minutes.

Accepted Answer

The answer of Stratford Company inspects every steam iron it...

Question 13

The materials usage variance is calculated by the equation

Accepted Answer

A) (Standard Price ´ Actual Quantity)- (Standard Price ´ Standard Quantity). 
B) (Standard Price ´ Standard Quantity)+ (Standard Price ´ Actual Quantity). 
C) (Actual Price ´ Actual Quantity)- (Standard Price ´ Actual Quantity). 
D) (Actual Price ´ Standard Quantity)+ (Actual Quantity ´ Standard Price). 
E) None of these. 
A) (Standard Price ´ Actual Quantity)- (Standard Price ´ Standard Quantity). 
B) (Standard Price ´ Standard Quantity)+ (Standard Price ´ Actual Quantity). 
C) (Actual Price ´ Actual Quantity)- (Standard Price ´ Actual Quantity). 
D) (Actual Price ´ Standard Quantity)+ (Actual Quantity ´ Standard Price). 
E) None of these.

Question 14

The standard quantity of materials allowed can be calculated by multiplying the unit labor standard by the actual output.

Accepted Answer

A) True 
 B)False

Question 15

Figure 10-8. The Perfect Tool Company (South America Division)produced 80,000 saw blades during the year.It took 1.5 hours of labor per blade at a rate of $8.50 per hour.However,its standard labor rate is $8.00.Its labor efficiency variance was an unfavorable $40,000.
Refer to Figure 10-8.What is Perfect's labor rate variance?

Accepted Answer

A) $57,500 U 
B) $57,500 F 
C) $60,000 U 
D) $60,000 F 
A) $57,500 U 
B) $57,500 F 
C) $60,000 U 
D) $60,000 F

Question 16

Currently attainable standards offer the most behavioral benefits because higher performance levels are attained through challenging,yet achievable,standards.

Accepted Answer

A) True 
 B)False

Question 17

You decide
Explain the three potential sources of quantitative standards.

Accepted Answer

Historical experience can provide an ini

Question 18

In setting standards,historical experience should be used with caution because it can perpetuate operating inefficiencies.

Accepted Answer

A) True 
 B)False

Question 19

The total budget variance is the difference between the actual cost of the input and its planned cost.

Accepted Answer

A) True 
 B)False

Question 20

During the month of March,Baker's Express purchased 10,000 pounds of flour at $1 per pound.At the end of March,Baker's Express found that it had an unfavorable materials price variance of $500.The standard cost per pound must be

Accepted Answer

A) $1.95 
B) $1.00 
C) $1.05 
D) $0.95 
A) $1.95 
B) $1.00 
C) $1.05 
D) $0.95

The labor rate variance is computed by

Claire Company uses a standard costing system.The following information pertains to direct labor costs for February: How many actual labor hours were worked during February for Claire Company?

Assume that SQ = Standard Quantity,SP = Standard Price,AQ = Actual Quantity,and AP = Actual Price.The correct entry along with the equation to record the issuance and usage of materials,assuming a favorable materials usage variance,is as follows

Standard cost systems are adopted

Which of the following is not true about Kaizen Standards?

During September,a small roofing company purchased 500 bundles of a certain type of shingle at a price of $35 per bundle,$5 less than the standard price.Its standard quantity of this type of shingle is 550 bundles.What is the journal entry to record the purchase of materials?

The standard cost per unit of output for a particular input is calculated by multiplying the standard input price by the standard input allowed per unit of output produced.

The materials usage variance is calculated by the equation

The standard quantity of materials allowed can be calculated by multiplying the unit labor standard by the actual output.

Currently attainable standards offer the most behavioral benefits because higher performance levels are attained through challenging,yet achievable,standards.

You decide Explain the three potential sources of quantitative standards.

In setting standards,historical experience should be used with caution because it can perpetuate operating inefficiencies.

The total budget variance is the difference between the actual cost of the input and its planned cost.

During the month of March,Baker's Express purchased 10,000 pounds of flour at $1 per pound.At the end of March,Baker's Express found that it had an unfavorable materials price variance of $500.The standard cost per pound must be

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Profit Planning

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

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Exam 10: Standard Costing: a Managerial Control Tool

The labor rate variance is computed by

Claire Company uses a standard costing system.The following information pertains to direct labor costs for February: How many actual labor hours were worked during February for Claire Company?

Assume that SQ = Standard Quantity,SP = Standard Price,AQ = Actual Quantity,and AP = Actual Price.The correct entry along with the equation to record the issuance and usage of materials,assuming a favorable materials usage variance,is as follows

Standard cost systems are adopted

Which of the following is not true about Kaizen Standards?

During September,a small roofing company purchased 500 bundles of a certain type of shingle at a price of $35 per bundle,$5 less than the standard price.Its standard quantity of this type of shingle is 550 bundles.What is the journal entry to record the purchase of materials?

The standard cost per unit of output for a particular input is calculated by multiplying the standard input price by the standard input allowed per unit of output produced.

The materials usage variance is calculated by the equation

The standard quantity of materials allowed can be calculated by multiplying the unit labor standard by the actual output.

Currently attainable standards offer the most behavioral benefits because higher performance levels are attained through challenging,yet achievable,standards.

You decide Explain the three potential sources of quantitative standards.

In setting standards,historical experience should be used with caution because it can perpetuate operating inefficiencies.

The total budget variance is the difference between the actual cost of the input and its planned cost.

During the month of March,Baker's Express purchased 10,000 pounds of flour at $1 per pound.At the end of March,Baker's Express found that it had an unfavorable materials price variance of $500.The standard cost per pound must be

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Profit Planning

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters