Question 1

Alex Co. prepared its income statement for management using a standard cost accounting system. Which of the following appears at the "standard" amount?

Accepted Answer

A) Sales 
B) Selling expenses 
C) Gross profit 
D) Cost of goods sold 
A) Sales 
B) Selling expenses 
C) Gross profit 
D) Cost of goods sold

Question 2

A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $5 per pound. If 12,000 units of product were produced last month and 37,500 pounds of direct materials were used, the direct materials quantity variance was

Accepted Answer

A) $4,500 favorable. 
B) $7,500 unfavorable. 
C) $4,500 unfavorable. 
D) $7,500 favorable. 
A) $4,500 favorable. 
B) $7,500 unfavorable. 
C) $4,500 unfavorable. 
D) $7,500 favorable.

Question 3

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 total labor variance is

Accepted Answer

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

Question 4

A company developed the following per-unit standards for its product: 2 gallons of direct materials at $8 per gallon. Last month, 3,000 gallons of direct materials were purchased for $22,800. The direct materials price variance for last month was

Accepted Answer

A) $22,800 favorable. 
B) $600 favorable. 
C) $1,200 favorable. 
D) $1,200 unfavorable. 
A) $22,800 favorable. 
B) $600 favorable. 
C) $1,200 favorable. 
D) $1,200 unfavorable.

Question 5

If actual costs are greater than standard costs, there is a(n)

Accepted Answer

A) normal variance. 
B) unfavorable variance. 
C) favorable variance. 
D) error in the accounting system. 
A) normal variance. 
B) unfavorable variance. 
C) favorable variance. 
D) error in the accounting system.

Question 6

The standard rate of pay is $20 per direct labor hour. If the actual direct labor payroll was $117,600 for 6,000 direct labor hours worked, the direct labor price (rate) variance is

Accepted Answer

A) $2,400 unfavorable. 
B) $2,400 favorable. 
C) $3,000 unfavorable. 
D) $3,000 favorable. 
A) $2,400 unfavorable. 
B) $2,400 favorable. 
C) $3,000 unfavorable. 
D) $3,000 favorable.

Question 7

The overhead controllable variance relates primarily to fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 8

The costing of inventories at standard cost for external financial statement reporting purposes is

Accepted Answer

A) not permitted. 
B) preferable to reporting at actual costs. 
C) in accordance with generally accepted accounting principles if significant differences exist between actual and standard costs. 
D) in accordance with generally accepted accounting principles if significant differences do not exist between actual and standard costs. 
A) not permitted. 
B) preferable to reporting at actual costs. 
C) in accordance with generally accepted accounting principles if significant differences exist between actual and standard costs. 
D) in accordance with generally accepted accounting principles if significant differences do not exist between actual and standard costs.

Question 9

A managerial accountant
1.	does not participate in the standard setting process.
2.	provides knowledge of cost behaviors in the standard setting process.
3.	provides input of historical costs to the standard setting process.

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 2 and 3 
A) 1 
B) 2 
C) 3 
D) 2 and 3

Question 10

A standard cost is

Accepted Answer

A) a cost which is paid for a group of similar products. 
B) the average cost in an industry. 
C) a predetermined cost. 
D) the historical cost of producing a product last year. 
A) a cost which is paid for a group of similar products. 
B) the average cost in an industry. 
C) a predetermined cost. 
D) the historical cost of producing a product last year.

Question 11

Edgar, Inc. has a materials price standard of $2.00 per pound. Six thousand pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds.
Edgar, Inc.'s total materials variance is

Accepted Answer

A) $2,400 U. 
B) $2,400 F. 
C) $2,520 U. 
D) $2,520 F. 
A) $2,400 U. 
B) $2,400 F. 
C) $2,520 U. 
D) $2,520 F.

Question 12

Actual costs that vary from standard costs always indicate inefficiencies.

Accepted Answer

A) True 
 B)False

Question 13

An advantage of standard costs is that they simplify costing of inventories and reduce clerical costs.

Accepted Answer

A) True 
 B)False

Question 14

The total variance is $35,000. The total materials variance is $14,000. The total labor variance is twice the total overhead variance. What is the total overhead variance?

Accepted Answer

A) $3,500 
B) $7,000 
C) $10,500 
D) $14,000 
A) $3,500 
B) $7,000 
C) $10,500 
D) $14,000

Question 15

If standard costs are incorporated into the accounting system,

Accepted Answer

A) it may simplify the costing of inventories and reduce clerical costs. 
B) it can eliminate the need for the budgeting process. 
C) the accounting system will produce information which is less relevant than the historical cost accounting system. 
D) approval of the shareholders is required. 
A) it may simplify the costing of inventories and reduce clerical costs. 
B) it can eliminate the need for the budgeting process. 
C) the accounting system will produce information which is less relevant than the historical cost accounting system. 
D) approval of the shareholders is required.

Question 16

If the labor quantity variance is unfavorable and the cause is inefficient use of direct labor, the responsibility rests with the

Accepted Answer

A) sales department. 
B) production department. 
C) budget office. 
D) controller's department. 
A) sales department. 
B) production department. 
C) budget office. 
D) controller's department.

Question 17

The total standard cost to produce one unit of product is shown

Accepted Answer

A) at the bottom of the income statement. 
B) at the bottom of the balance sheet. 
C) on the standard cost card. 
D) in the Work in Process Inventory account. 
A) at the bottom of the income statement. 
B) at the bottom of the balance sheet. 
C) on the standard cost card. 
D) in the Work in Process Inventory account.

Question 18

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon's materials quantity variance is

Accepted Answer

A) $135 F. 
B) $465 U. 
C) $600 U. 
D) $1,050 U. 
A) $135 F. 
B) $465 U. 
C) $600 U. 
D) $1,050 U.

Question 19

Standard cost + price variance + quantity variance = Budgeted cost.

Accepted Answer

A) True 
 B)False

Question 20

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 $8,900 variable and $5,400 fixed, and 1,500 units were produced. The direct labor standard is 2 hours per unit produced. The total overhead variance is

Accepted Answer

A) $1,800 F. 
B) $700 F. 
C) $700 U. 
D) $1,800 U. 
A) $1,800 F. 
B) $700 F. 
C) $700 U. 
D) $1,800 U.

Exam 22: Standard Costs and Balanced Scorecard

Alex Co. prepared its income statement for management using a standard cost accounting system. Which of the following appears at the "standard" amount?

A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $5 per pound. If 12,000 units of product were produced last month and 37,500 pounds of direct materials were used, the direct materials quantity variance was

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 total labor variance is

A company developed the following per-unit standards for its product: 2 gallons of direct materials at $8 per gallon. Last month, 3,000 gallons of direct materials were purchased for $22,800. The direct materials price variance for last month was

If actual costs are greater than standard costs, there is a(n)

The standard rate of pay is $20 per direct labor hour. If the actual direct labor payroll was $117,600 for 6,000 direct labor hours worked, the direct labor price (rate) variance is

The overhead controllable variance relates primarily to fixed overhead costs.

The costing of inventories at standard cost for external financial statement reporting purposes is

A managerial accountant 1. does not participate in the standard setting process. 2. provides knowledge of cost behaviors in the standard setting process. 3. provides input of historical costs to the standard setting process.

A standard cost is

Edgar, Inc. has a materials price standard of $2.00 per pound. Six thousand pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds. Edgar, Inc.'s total materials variance is

Actual costs that vary from standard costs always indicate inefficiencies.

An advantage of standard costs is that they simplify costing of inventories and reduce clerical costs.

The total variance is $35,000. The total materials variance is $14,000. The total labor variance is twice the total overhead variance. What is the total overhead variance?

If standard costs are incorporated into the accounting system,

If the labor quantity variance is unfavorable and the cause is inefficient use of direct labor, the responsibility rests with the

The total standard cost to produce one unit of product is shown

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon's materials quantity variance is

Standard cost + price variance + quantity variance = Budgeted cost.

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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