Question 1

Most companies that use standards set them at

Accepted Answer

A) the normal level. 
B) a conceivable level. 
C) the ideal level. 
D) last year's level. 
A) the normal level. 
B) a conceivable level. 
C) the ideal level. 
D) last year's level.

Question 2

Which of the following statements is true?

Accepted Answer

A) Variances are the differences between total actual costs and total standard costs. 
B) When actual costs exceed standard costs, the variance is favorable. 
C) An unfavorable variance results when actual costs are decreasing but standards are not changed. 
D) All of the above are true. 
A) Variances are the differences between total actual costs and total standard costs. 
B) When actual costs exceed standard costs, the variance is favorable. 
C) An unfavorable variance results when actual costs are decreasing but standards are not changed. 
D) All of the above are true.

Question 3

The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11,200 gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was

Accepted Answer

A) $3,200 favorable. 
B) $2,400 favorable. 
C) $3,200 unfavorable. 
D) $5,600 unfavorable. 
A) $3,200 favorable. 
B) $2,400 favorable. 
C) $3,200 unfavorable. 
D) $5,600 unfavorable.

Question 4

What is a standard cost?

Accepted Answer

A) The total number of units times the budgeted amount expected 
B) Any amount that appears on a budget 
C) The total amount that appears on the budget for product costs 
D) The amount management thinks should be incurred to produce a good or service 
A) The total number of units times the budgeted amount expected 
B) Any amount that appears on a budget 
C) The total amount that appears on the budget for product costs 
D) The amount management thinks should be incurred to produce a good or service

Question 5

An unfavorable labor quantity variance indicates that the actual number of direct labor hours worked was greater than the number of direct labor hours that should have been worked for the output attained.

Accepted Answer

A) True 
 B)False

Question 6

Standard costs may be used by

Accepted Answer

A) universities. 
B) governmental agencies. 
C) charitable organizations. 
D) All of these answers are correct. 
A) universities. 
B) governmental agencies. 
C) charitable organizations. 
D) All of these answers are correct.

Question 7

The final decision as to what standard costs should be is the responsibility of

Accepted Answer

A) the quality control engineer. 
B) the managerial accountants. 
C) the purchasing agent. 
D) management. 
A) the quality control engineer. 
B) the managerial accountants. 
C) the purchasing agent. 
D) management.

Question 8

In developing a standard cost for direct materials, a price factor and a quantity factor must be considered.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is false?

Accepted Answer

A) A standard cost is more accurate than a budgeted cost. 
B) A standard is a unit amount. 
C) In concept, standards and budgets are essentially the same. 
D) The standard cost of a product is equivalent to the budgeted cost per unit of product. 
A) A standard cost is more accurate than a budgeted cost. 
B) A standard is a unit amount. 
C) In concept, standards and budgets are essentially the same. 
D) The standard cost of a product is equivalent to the budgeted cost per unit of product.

Question 10

A company uses 40,000 gallons of materials for which they paid $7.00 a gallon. The materials price variance was $80,000 favorable. What is the standard price per gallon?

Accepted Answer

A) $2 
B) $5 
C) $7 
D) $9 
A) $2 
B) $5 
C) $7 
D) $9

Question 11

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 quantity variance is

Accepted Answer

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

Question 12

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 materials price variance is

Accepted Answer

A) $120 U. 
B) $1,200 U. 
C) $1,080 U. 
D) $1,200 F 
A) $120 U. 
B) $1,200 U. 
C) $1,080 U. 
D) $1,200 F

Question 13

The per-unit standards for direct materials are 2 pounds at $5 per pound. Last month, 11,200 pounds of direct materials that actually cost $53,000 were used to produce 6,000 units of product. The direct materials quantity variance for last month was

Accepted Answer

A) $4,000 favorable. 
B) $3,000 favorable. 
C) $4,000 unfavorable. 
D) $7,000 unfavorable. 
A) $4,000 favorable. 
B) $3,000 favorable. 
C) $4,000 unfavorable. 
D) $7,000 unfavorable.

Question 14

Variances from standards are

Accepted Answer

A) expressed in total dollars. 
B) expressed on a per-unit basis. 
C) expressed on a percentage basis. 
D) All of these answers are correct. 
A) expressed in total dollars. 
B) expressed on a per-unit basis. 
C) expressed on a percentage basis. 
D) All of these answers are correct.

Question 15

Use the following information for questions 
Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively.
-The standard direct labor hours per unit is

Accepted Answer

A) 1 hour. 
B) 1.1 hours. 
C) 1.2 hours. 
D) 1.3 hours. 
A) 1 hour. 
B) 1.1 hours. 
C) 1.2 hours. 
D) 1.3 hours.

Question 16

Which one of the following describes the total overhead variance?

Accepted Answer

A) The difference between what was actually incurred and the flexible budget amount 
B) The difference between what was actually incurred and overhead applied 
C) The difference between the overhead applied and the flexible budget amount 
D) The difference between what was actually incurred and the total production budget 
A) The difference between what was actually incurred and the flexible budget amount 
B) The difference between what was actually incurred and overhead applied 
C) The difference between the overhead applied and the flexible budget amount 
D) The difference between what was actually incurred and the total production budget

Question 17

In concept, standards and budgets are essentially the same.

Accepted Answer

A) True 
 B)False

Question 18

Use the following information for questions 
Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively.
-The standard direct materials quantity per unit is

Accepted Answer

A) 2.6 pounds. 
B) 2.7 pounds. 
C) 2.9 pounds. 
D) 3.0 pounds. 
A) 2.6 pounds. 
B) 2.7 pounds. 
C) 2.9 pounds. 
D) 3.0 pounds.

Question 19

A company purchases 20,000 pounds of materials. The materials price variance is $4,000 favorable. What is the difference between the standard and actual price paid for the materials?

Accepted Answer

A) $1.00 
B) $0.20 
C) $5.00 
D) Cannot be determined from the data provided. 
A) $1.00 
B) $0.20 
C) $5.00 
D) Cannot be determined from the data provided.

Question 20

The standard predetermined overhead rate must be based on direct labor hours as the standard activity index.

Accepted Answer

A) True 
 B)False

Exam 22: Standard Costs and Balanced Scorecard

Most companies that use standards set them at

Which of the following statements is true?

The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11,200 gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was

What is a standard cost?

An unfavorable labor quantity variance indicates that the actual number of direct labor hours worked was greater than the number of direct labor hours that should have been worked for the output attained.

Standard costs may be used by

The final decision as to what standard costs should be is the responsibility of

In developing a standard cost for direct materials, a price factor and a quantity factor must be considered.

Which of the following statements is false?

A company uses 40,000 gallons of materials for which they paid $7.00 a gallon. The materials price variance was $80,000 favorable. What is the standard price per gallon?

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 quantity variance 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 materials price variance is

The per-unit standards for direct materials are 2 pounds at $5 per pound. Last month, 11,200 pounds of direct materials that actually cost $53,000 were used to produce 6,000 units of product. The direct materials quantity variance for last month was

Variances from standards are

Which one of the following describes the total overhead variance?

In concept, standards and budgets are essentially the same.

A company purchases 20,000 pounds of materials. The materials price variance is $4,000 favorable. What is the difference between the standard and actual price paid for the materials?

The standard predetermined overhead rate must be based on direct labor hours as the standard activity index.

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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