Question 1

A standard cost system may be used in

Accepted Answer

A)  job order costing, but not process costing. 
B)  process costing, but not job order costing. 
C)  either job order costing or process costing. 
D)  neither job order costing nor process costing. 
A)  job order costing, but not process costing. 
B)  process costing, but not job order costing. 
C)  either job order costing or process costing. 
D)  neither job order costing nor process costing. C

Question 2

In a totally automated organization, using theoretical capacity will generally provide the highest fixed overhead application rate.

Accepted Answer

A) True 
 B)False  False

Question 3

Expected standards are a valuable tool for motivation and control.

Accepted Answer

A) True 
 B)False  False

Question 4

Ritchie Company Ritchie Company uses a standard cost system for its production process. Ritchie Company applies overhead based on direct labor hours. The following information is available for July:
  Refer to Ritchie Company Using the two-variance approach, what is the noncontrollable variance?

Accepted Answer

A)  $26,040 F 
B)  $0 
C)  $6,930 U 
D)  $13,260 U 
A)  $26,040 F 
B)  $0 
C)  $6,930 U 
D)  $13,260 U

Question 5

When multiple materials are used, the effect of substituting a non-standard mix of materials during the production process is referred to as a ____________________ variance.

Accepted Answer

The answer of When multiple materials are used, the effect...

Question 6

Which of the following standards can commonly be reached or slightly exceeded by workers in a motivated work environment?

Accepted Answer

A)  no no no 
B)  no yes yes 
C)  yes yes no 
D)  no yes no 
A)  no no no 
B)  no yes yes 
C)  yes yes no 
D)  no yes no

Question 7

Genesis Company Genesis Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for September when Genesis produced 5,000 units:
  Refer to Genesis Company. Using the three-variance approach, what is the spending variance?

Accepted Answer

A)  $2,525 U 
B)  $2,775 U 
C)  $4,375 U 
D)  $4,375 F 
A)  $2,525 U 
B)  $2,775 U 
C)  $4,375 U 
D)  $4,375 F

Question 8

The difference between standard quantity allowed and quantity used for a unit of output is known as an ______________________________.

Accepted Answer

The answer of The difference between standard quantity allowed and...

Question 9

Ideal standards generally yield favorable variances.

Accepted Answer

A) True 
 B)False

Question 10

Ritchie Company Ritchie Company uses a standard cost system for its production process. Ritchie Company applies overhead based on direct labor hours. The following information is available for July:
  Refer to Ritchie Company Using the three-variance approach, what is the spending variance?

Accepted Answer

A)  $23,850 U 
B)  $23,850 F 
C)  $14,280 F 
D)  $14,280 U 
A)  $23,850 U 
B)  $23,850 F 
C)  $14,280 F 
D)  $14,280 U

Question 11

Fleetwood Company Fleetwood Company uses a standard cost system for its production process and applies overhead based on direct labor hours. The following information is available for May when Fleetwood produced 4,500 units:
  Refer to Fleetwood Company. Using the four-variance approach, what is the fixed overhead spending variance?

Accepted Answer

A)  $7,000.00 U 
B)  $3,125.00 F 
C)  $ 750.00 U 
D)  $ 750.00 F 
A)  $7,000.00 U 
B)  $3,125.00 F 
C)  $ 750.00 U 
D)  $ 750.00 F

Question 12

The use of separate variable and fixed overhead rates is better than a combined rate because such a system

Accepted Answer

A)  is less expensive to operate and maintain. 
B)  does not result in underapplied or overapplied overhead. 
C)  is more effective in assigning overhead costs to products. 
D)  is easier to develop. 
A)  is less expensive to operate and maintain. 
B)  does not result in underapplied or overapplied overhead. 
C)  is more effective in assigning overhead costs to products. 
D)  is easier to develop.

Question 13

A budget variance is a controllable variance.

Accepted Answer

A) True 
 B)False

Question 14

The usage variance reflects the difference between the price paid for inputs and the standard price for those inputs.

Accepted Answer

A) True 
 B)False

Question 15

As production becomes more automated, direct labor may be viewed more as a conversion cost than as a prime cost.

Accepted Answer

A) True 
 B)False

Question 16

Hoover Company
Hoover Company applies overhead based on direct labor hours and has the following available for the current month:
   Refer to Hoover Company. Compute all the appropriate variances using the three-variance approach.

Accepted Answer

The answer of Hoover Company
Hoover Company applies overhead based on...

Question 17

Truman Company
Truman Company applies overhead based on direct labor hours and has the following available for the current month:
   Refer to Truman Company. Compute all the appropriate variances using the three-variance approach.

Accepted Answer

The answer of Truman Company
Truman Company applies overhead based on...

Question 18

The sum of the labor mix and labor yield variances equals

Accepted Answer

A)  the labor efficiency variance. 
B)  the total labor variance. 
C)  the labor rate variance. 
D)  nothing because these two variances cannot be added since they use different costs. 
A)  the labor efficiency variance. 
B)  the total labor variance. 
C)  the labor rate variance. 
D)  nothing because these two variances cannot be added since they use different costs.

Question 19

The formula for usage variance is (AQ - SQ) * SP.

Accepted Answer

A) True 
 B)False

Question 20

The formula for price/rate variance is (AP - SP) ´ SQ.

Accepted Answer

A) True 
 B)False

A standard cost system may be used in

In a totally automated organization, using theoretical capacity will generally provide the highest fixed overhead application rate.

Expected standards are a valuable tool for motivation and control.

Ritchie Company Ritchie Company uses a standard cost system for its production process. Ritchie Company applies overhead based on direct labor hours. The following information is available for July: Refer to Ritchie Company Using the two-variance approach, what is the noncontrollable variance?

When multiple materials are used, the effect of substituting a non-standard mix of materials during the production process is referred to as a ____________________ variance.

Which of the following standards can commonly be reached or slightly exceeded by workers in a motivated work environment?

The difference between standard quantity allowed and quantity used for a unit of output is known as an ______________________________.

Ideal standards generally yield favorable variances.

Ritchie Company Ritchie Company uses a standard cost system for its production process. Ritchie Company applies overhead based on direct labor hours. The following information is available for July: Refer to Ritchie Company Using the three-variance approach, what is the spending variance?

The use of separate variable and fixed overhead rates is better than a combined rate because such a system

A budget variance is a controllable variance.

The usage variance reflects the difference between the price paid for inputs and the standard price for those inputs.

As production becomes more automated, direct labor may be viewed more as a conversion cost than as a prime cost.

Hoover Company Hoover Company applies overhead based on direct labor hours and has the following available for the current month: Refer to Hoover Company. Compute all the appropriate variances using the three-variance approach.

Truman Company Truman Company applies overhead based on direct labor hours and has the following available for the current month: Refer to Truman Company. Compute all the appropriate variances using the three-variance approach.

The sum of the labor mix and labor yield variances equals

The formula for usage variance is (AQ - SQ) * SP.

The formula for price/rate variance is (AP - SP) ´ SQ.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, Support Department Allocations, and Transfer Pricing

Performance Measurement, Balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Exam 7: Standard Costing and Variance Analysis

A standard cost system may be used in

In a totally automated organization, using theoretical capacity will generally provide the highest fixed overhead application rate.

Expected standards are a valuable tool for motivation and control.

Ritchie Company Ritchie Company uses a standard cost system for its production process. Ritchie Company applies overhead based on direct labor hours. The following information is available for July: Refer to Ritchie Company Using the two-variance approach, what is the noncontrollable variance?

When multiple materials are used, the effect of substituting a non-standard mix of materials during the production process is referred to as a ____________________ variance.

Which of the following standards can commonly be reached or slightly exceeded by workers in a motivated work environment?

The difference between standard quantity allowed and quantity used for a unit of output is known as an ______________________________.

Ideal standards generally yield favorable variances.

Ritchie Company Ritchie Company uses a standard cost system for its production process. Ritchie Company applies overhead based on direct labor hours. The following information is available for July: Refer to Ritchie Company Using the three-variance approach, what is the spending variance?

The use of separate variable and fixed overhead rates is better than a combined rate because such a system

A budget variance is a controllable variance.

The usage variance reflects the difference between the price paid for inputs and the standard price for those inputs.

As production becomes more automated, direct labor may be viewed more as a conversion cost than as a prime cost.

Hoover Company Hoover Company applies overhead based on direct labor hours and has the following available for the current month: Refer to Hoover Company. Compute all the appropriate variances using the three-variance approach.

Truman Company Truman Company applies overhead based on direct labor hours and has the following available for the current month: Refer to Truman Company. Compute all the appropriate variances using the three-variance approach.

The sum of the labor mix and labor yield variances equals

The formula for usage variance is (AQ - SQ) * SP.

The formula for price/rate variance is (AP - SP) ´ SQ.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, Support Department Allocations, and Transfer Pricing

Performance Measurement, Balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters