Question 1

Ideal standards

Accepted Answer

A) are rigorous but attainable. 
B) are the standards generally used in a master budget. 
C) reflect optimal performance under perfect operating conditions. 
D) will always motivate employees to achieve the maximum output. 
A) are rigorous but attainable. 
B) are the standards generally used in a master budget. 
C) reflect optimal performance under perfect operating conditions. 
D) will always motivate employees to achieve the maximum output.

Question 2

The matrix approach to variance analysis

Accepted Answer

A) will yield slightly different variances than the formula approach. 
B) is more accurate than the formula approach. 
C) does not separate the price and quantity variance calculations. 
D) provides a convenient structure for determining each variance. 
A) will yield slightly different variances than the formula approach. 
B) is more accurate than the formula approach. 
C) does not separate the price and quantity variance calculations. 
D) provides a convenient structure for determining each variance.

Question 3

If actual direct materials costs are greater than standard direct materials costs, it means that

Accepted Answer

A) actual costs were calculated incorrectly. 
B) the actual unit price of direct materials was greater than the standard unit price of direct materials. 
C) the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected. 
D) the purchasing agent or the production foreman is inefficient. 
A) actual costs were calculated incorrectly. 
B) the actual unit price of direct materials was greater than the standard unit price of direct materials. 
C) the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected. 
D) the purchasing agent or the production foreman is inefficient.

Question 4

The predetermined overhead rate for Zane Company is $5, comprised of a variable overhead rate of $3 and a fixed rate of $2. The amount of budgeted overhead costs at normal capacity of $150,000 was divided by normal capacity of 30,000 direct labor hours, to arrive at the predetermined overhead rate of $5. Actual overhead for June was $9,500 variable and $6,050 fixed, and standard hours allowed for the product produced in June was 3,000 hours. The total overhead variance is

Accepted Answer

A) $3,050 F. 
B) $550 F. 
C) $550 U. 
D) $3,050 U. 
A) $3,050 F. 
B) $550 F. 
C) $550 U. 
D) $3,050 U.

Question 5

Dillon has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, Dillon used 3,850 hours of labor at a total cost of $46,970. Dillon's labor price variance is

Accepted Answer

A) $770 U. 
B) $800 U. 
C) $1,030 F. 
D) $1,930 F. 
A) $770 U. 
B) $800 U. 
C) $1,030 F. 
D) $1,930 F.

Question 6

The customer perspective of the balanced scorecard approach

Accepted Answer

A) is the most traditional view of the company. 
B) evaluates the internal operating processes critical to the success of the organization. 
C) evaluates how well the company develops and retains its employees. 
D) evaluates the company from the viewpoint of those people who buy its products or services. 
A) is the most traditional view of the company. 
B) evaluates the internal operating processes critical to the success of the organization. 
C) evaluates how well the company develops and retains its employees. 
D) evaluates the company from the viewpoint of those people who buy its products or services.

Question 7

In reporting variances,

Accepted Answer

A) promptness is relatively unimportant. 
B) management normally investigates all variances. 
C) the reports should facilitate management by exception. 
D) the reports are not departmentalized. 
A) promptness is relatively unimportant. 
B) management normally investigates all variances. 
C) the reports should facilitate management by exception. 
D) the reports are not departmentalized.

Question 8

A manufacturing company would include setup and downtime in their direct

Accepted Answer

A) materials price standard. 
B) materials quantity standard. 
C) labor price standard. 
D) labor quantity standard. 
A) materials price standard. 
B) materials quantity standard. 
C) labor price standard. 
D) labor quantity standard.

Question 9

An unfavorable materials quantity variance would occur if

Accepted Answer

A) more materials were purchased than were used. 
B) actual pounds of materials used were less than the standard pounds allowed. 
C) actual labor hours used were greater than the standard labor hours allowed. 
D) actual pounds of materials used were greater than the standard pounds allowed. 
A) more materials were purchased than were used. 
B) actual pounds of materials used were less than the standard pounds allowed. 
C) actual labor hours used were greater than the standard labor hours allowed. 
D) actual pounds of materials used were greater than the standard pounds allowed.

Question 10

The use of an inexperienced worker instead of an experienced employee can result in a favorable labor price variance but probably an unfavorable quantity variance.

Accepted Answer

A) True 
 B)False

Question 11

Which is not one of the four most commonly used perspectives on a balanced scorecard?

Accepted Answer

A) The financial perspective 
B) The customer perspective 
C) The external process perspective 
D) The learning and growth perspective 
A) The financial perspective 
B) The customer perspective 
C) The external process perspective 
D) The learning and growth perspective

Question 12

Standard cost cards are the subsidiary ledger for the Work in Process account in a standard cost system.

Accepted Answer

A) True 
 B)False

Question 13

Labor efficiency is measured by the

Accepted Answer

A) materials quantity variance. 
B) total labor variance. 
C) labor quantity variance. 
D) labor rate variance. 
A) materials quantity variance. 
B) total labor variance. 
C) labor quantity variance. 
D) labor rate variance.

Question 14

The direct materials price standard should include an amount for all of the following except

Accepted Answer

A) receiving costs. 
B) storing costs. 
C) handling costs. 
D) normal spoilage costs. 
A) receiving costs. 
B) storing costs. 
C) handling costs. 
D) normal spoilage costs.

Question 15

Information on Jayhawk's direct labor costs for the month of August is as follows: $$\begin{array} { l r } 
\text { Actual rate } & \$ 10 \
\text { Standard hours } & 11,000 \
\text { Actual hours } & 10,000 \
\text { Direct labor price variance-unfavorable } & \$ 4,000
\end{array}$$ What was the standard rate for August?

Accepted Answer

A) $9.96 
B) $9.60 
C) $10.40 
D) $10.04 
A) $9.96 
B) $9.60 
C) $10.40 
D) $10.04

Question 16

The cost of freight-in

Accepted Answer

A) is to be included in the standard cost of direct materials. 
B) is considered a selling expense. 
C) should have a separate standard apart from direct materials. 
D) should not be included in a standard cost system. 
A) is to be included in the standard cost of direct materials. 
B) is considered a selling expense. 
C) should have a separate standard apart from direct materials. 
D) should not be included in a standard cost system.

Question 17

Manufacturing overhead costs are applied to work in process on the basis of

Accepted Answer

A) actual hours worked. 
B) standard hours allowed. 
C) ratio of actual variable to fixed costs. 
D) actual overhead costs incurred. 
A) actual hours worked. 
B) standard hours allowed. 
C) ratio of actual variable to fixed costs. 
D) actual overhead costs incurred.

Question 18

A credit to a Materials Quantity Variance account indicates that the actual quantity of direct materials used was greater than the standard quantity of direct materials allowed.

Accepted Answer

A) True 
 B)False

Question 19

All of the following are advantages of standard costs except they

Accepted Answer

A) facilitate management planning. 
B) are useful in setting selling prices. 
C) simplify costing in inventories. 
D) increase net income. 
A) facilitate management planning. 
B) are useful in setting selling prices. 
C) simplify costing in inventories. 
D) increase net income.

Question 20

A company purchases 12,000 pounds of materials. The materials price variance is $6,000 favorable. What is the difference between the standard and actual price paid for the materials?

Accepted Answer

A) $1.00 
B) $.50 
C) $2.00 
D) $6.00 
A) $1.00 
B) $.50 
C) $2.00 
D) $6.00

Exam 22: Standard Costs and Balanced Scorecard

Ideal standards

The matrix approach to variance analysis

If actual direct materials costs are greater than standard direct materials costs, it means that

Dillon has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, Dillon used 3,850 hours of labor at a total cost of $46,970. Dillon's labor price variance is

The customer perspective of the balanced scorecard approach

In reporting variances,

A manufacturing company would include setup and downtime in their direct

An unfavorable materials quantity variance would occur if

The use of an inexperienced worker instead of an experienced employee can result in a favorable labor price variance but probably an unfavorable quantity variance.

Which is not one of the four most commonly used perspectives on a balanced scorecard?

Standard cost cards are the subsidiary ledger for the Work in Process account in a standard cost system.

Labor efficiency is measured by the

The direct materials price standard should include an amount for all of the following except

Information on Jayhawk's direct labor costs for the month of August is as follows: Actual rate \ 10 Standard hours 11,000 Actual hours 10,000 Direct labor price variance-unfavorable \ 4,000 What was the standard rate for August?

The cost of freight-in

Manufacturing overhead costs are applied to work in process on the basis of

A credit to a Materials Quantity Variance account indicates that the actual quantity of direct materials used was greater than the standard quantity of direct materials allowed.

All of the following are advantages of standard costs except they

A company purchases 12,000 pounds of materials. The materials price variance is $6,000 favorable. What is the difference between the standard and actual price paid for the materials?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Planning for Capital Investments

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