Question 1

Standard costs may be incorporated into the accounts in the general ledger.

Accepted Answer

A) True 
 B)False

Question 2

The standard quantity allowed for the units produced was 4,500 pounds, the standard price was $2.50 per pound, and the materials quantity variance was $375 favorable. Each unit uses 1 pound of materials. How many pounds were actually used?

Accepted Answer

A) 4,350 
B) 4,500 
C) 11,625 
D) 4,650 
A) 4,350 
B) 4,500 
C) 11,625 
D) 4,650

Question 3

When is a variance considered to be 'material'?

Accepted Answer

A) When it is large compared to the actual cost 
B) When it is infrequent 
C) When it is unfavorable 
D) When it could have been controlled more effectively 
A) When it is large compared to the actual cost 
B) When it is infrequent 
C) When it is unfavorable 
D) When it could have been controlled more effectively

Question 4

The formula for the materials quantity variance is

Accepted Answer

A) (SQ × AP) - (SQ × SP). 
B) (AQ × AP) - (AQ × SP). 
C) (AQ × SP) - (SQ × SP). 
D) (AQ × AP) - (SQ × SP). 
A) (SQ × AP) - (SQ × SP). 
B) (AQ × AP) - (AQ × SP). 
C) (AQ × SP) - (SQ × SP). 
D) (AQ × AP) - (SQ × SP).

Question 5

The standard number of hours that should have been worked for the output attained is 10,000 direct labor hours and the actual number of direct labor hours worked was 10,500. If the direct labor price variance was $10,500 unfavorable, and the standard rate of pay was $12 per direct labor hour, what was the actual rate of pay for direct labor?

Accepted Answer

A) $11 per direct labor hour 
B) $9 per direct labor hour 
C) $13 per direct labor hour 
D) $12 per direct labor hour 
A) $11 per direct labor hour 
B) $9 per direct labor hour 
C) $13 per direct labor hour 
D) $12 per direct labor hour

Question 6

The labor time requirements for standards may be determined by the

Accepted Answer

A) sales manager. 
B) product manager. 
C) industrial engineers. 
D) payroll department manager. 
A) sales manager. 
B) product manager. 
C) industrial engineers. 
D) payroll department manager.

Question 7

Which one of the following statements is true?

Accepted Answer

A) If the materials price variance is unfavorable, then the materials quantity variance must also be unfavorable. 
B) If the materials price variance is unfavorable, then the materials quantity variance must be favorable. 
C) Price and quantity variances move in the same direction.If one is favorable, the others will be as well. 
D) There is no correlation of favorable or unfavorable for price and quantity variances. 
A) If the materials price variance is unfavorable, then the materials quantity variance must also be unfavorable. 
B) If the materials price variance is unfavorable, then the materials quantity variance must be favorable. 
C) Price and quantity variances move in the same direction.If one is favorable, the others will be as well. 
D) There is no correlation of favorable or unfavorable for price and quantity variances.

Question 8

The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 1,800 units, the actual direct labor cost was $48,000 for 3,000 direct labor hours worked, the total direct labor variance is

Accepted Answer

A) $1,800 unfavorable. 
B) $6,000 favorable. 
C) $3,750 unfavorable. 
D) $6,000 unfavorable. 
A) $1,800 unfavorable. 
B) $6,000 favorable. 
C) $3,750 unfavorable. 
D) $6,000 unfavorable.

Question 9

The most rigorous of all standards is the

Accepted Answer

A) normal standard. 
B) realistic standard. 
C) ideal standard. 
D) conceivable standard. 
A) normal standard. 
B) realistic standard. 
C) ideal standard. 
D) conceivable standard.

Question 10

The overhead volume variance relates only to fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 11

The formula for the labor price variance is

Accepted Answer

A) (AH) x (SR) less (SH) x (SR). 
B) (AH) x (AR) less (AH) x (SR). 
C) (AH) x (AR) less (SH) x (SR). 
D) (AH) x (SR) less (AH) x (SR). 
A) (AH) x (SR) less (SH) x (SR). 
B) (AH) x (AR) less (AH) x (SR). 
C) (AH) x (AR) less (SH) x (SR). 
D) (AH) x (SR) less (AH) x (SR).

Question 12

A standard is a unit amount, whereas a budget is a total amount.

Accepted Answer

A) True 
 B)False

Question 13

If actual costs are less than standard costs, the variance is favorable.

Accepted Answer

A) True 
 B)False

Question 14

Normal standards should be rigorous but attainable.

Accepted Answer

A) True 
 B)False

Question 15

Standards based on the optimum level of performance under perfect operating conditions are

Accepted Answer

A) attainable standards. 
B) ideal standards. 
C) normal standards. 
D) practical standards. 
A) attainable standards. 
B) ideal standards. 
C) normal standards. 
D) practical standards.

Question 16

In using variance reports, management looks for

Accepted Answer

A) total assets invested. 
B) significant variances. 
C) competitors' costs in comparison to the company's costs. 
D) more efficient ways of valuing inventories. 
A) total assets invested. 
B) significant variances. 
C) competitors' costs in comparison to the company's costs. 
D) more efficient ways of valuing inventories.

Question 17

The standard direct materials quantity does not include allowances for

Accepted Answer

A) unavoidable waste. 
B) normal spoilage. 
C) unexpected spoilage. 
D) all of the above are included. 
A) unavoidable waste. 
B) normal spoilage. 
C) unexpected spoilage. 
D) all of the above are included.

Question 18

In Zero Company's income statement, they report gross profit of $55,000 at standard and the following variances: $$\begin{array} { l r r } 
\text { Materials price } & \$ 420 & \mathrm {~F} \
\text { Materials quantity } & 600 & \mathrm {~F} \
\text { Labor price } & 420 & \mathrm { U } \
\text { Labor quantity } & 1,000 & \mathrm {~F} \
\text { Overhead } & 900 & \mathrm {~F}
\end{array}$$ Zero would report actual gross profit of

Accepted Answer

A) $51,660. 
B) $52,500. 
C) $57,500. 
D) $58,340. 
A) $51,660. 
B) $52,500. 
C) $57,500. 
D) $58,340.

Question 19

The direct labor quantity standard is sometimes called the direct labor

Accepted Answer

A) volume standard. 
B) effectiveness standard. 
C) efficiency standard. 
D) quality standard. 
A) volume standard. 
B) effectiveness standard. 
C) efficiency standard. 
D) quality standard.

Question 20

All Urban Company produces a product requiring 4 pounds of material costing $3.50 per pound. During December, All Urban purchased 4,200 pounds of material for $14,112 and used the material to produce 500 products. What was the materials price variance for December?

Accepted Answer

A) $560 F 
B) $588 F 
C) $112 U 
D) $672 U 
A) $560 F 
B) $588 F 
C) $112 U 
D) $672 U

Exam 22: Standard Costs and Balanced Scorecard

Standard costs may be incorporated into the accounts in the general ledger.

The standard quantity allowed for the units produced was 4,500 pounds, the standard price was $2.50 per pound, and the materials quantity variance was $375 favorable. Each unit uses 1 pound of materials. How many pounds were actually used?

When is a variance considered to be 'material'?

The formula for the materials quantity variance is

The labor time requirements for standards may be determined by the

Which one of the following statements is true?

The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 1,800 units, the actual direct labor cost was $48,000 for 3,000 direct labor hours worked, the total direct labor variance is

The most rigorous of all standards is the

The overhead volume variance relates only to fixed overhead costs.

The formula for the labor price variance is

A standard is a unit amount, whereas a budget is a total amount.

If actual costs are less than standard costs, the variance is favorable.

Normal standards should be rigorous but attainable.

Standards based on the optimum level of performance under perfect operating conditions are

In using variance reports, management looks for

The standard direct materials quantity does not include allowances for

In Zero Company's income statement, they report gross profit of $55,000 at standard and the following variances: Materials price \ 420 Materials quantity 600 Labor price 420 Labor quantity 1,000 Overhead 900 Zero would report actual gross profit of

The direct labor quantity standard is sometimes called the direct labor

All Urban Company produces a product requiring 4 pounds of material costing $3.50 per pound. During December, All Urban purchased 4,200 pounds of material for $14,112 and used the material to produce 500 products. What was the materials price variance for December?

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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