Question 1

Standard costs should always be revised when they differ from actual costs.

Accepted Answer

A) True 
 B)False

Question 2

The formula to the compute direct labor time variance is to calculate the difference between

Accepted Answer

A)  Actual costs - Standard costs 
B)  Actual costs + Standard costs 
C)  Actual hours × Standard rate) - Standard costs 
D)  Actual costs - Actual hours × Standard rate) 
A)  Actual costs - Standard costs 
B)  Actual costs + Standard costs 
C)  Actual hours × Standard rate) - Standard costs 
D)  Actual costs - Actual hours × Standard rate)

Question 3

Which of the following is not a reason standard costs are separated into two components?

Accepted Answer

A)  The price and quantity variances need to be identified separately to correct the actual major differences 
B)  Identifying variances determines which manager must find a solution to major discrepancies 
C)  If a negative variance is overshadowed by a favorable variance, managers may overlook potential corrections 
D)  Variances bring attention to discrepancies in the budget and require managers to revise budgets closer to actual results 
A)  The price and quantity variances need to be identified separately to correct the actual major differences 
B)  Identifying variances determines which manager must find a solution to major discrepancies 
C)  If a negative variance is overshadowed by a favorable variance, managers may overlook potential corrections 
D)  Variances bring attention to discrepancies in the budget and require managers to revise budgets closer to actual results

Question 4

The formula to compute the direct material quantity variance is to calculate the difference between

Accepted Answer

A)  Actual costs - Standard costs 
B)  Standard costs - Actual costs 
C)  Actual quantity × Standard price) - Standard costs 
D)  Actual costs - Standard price × Standard costs) 
A)  Actual costs - Standard costs 
B)  Standard costs - Actual costs 
C)  Actual quantity × Standard price) - Standard costs 
D)  Actual costs - Standard price × Standard costs)

Question 5

A company must choose either a standard system or nonfinancial performance measures to evaluate the performance of a company.

Accepted Answer

A) True 
 B)False

Question 6

Oak Company produces a chair that requires 6 yards of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 48,875 yards.
Journalize the entry to record the standard direct materials used in production.

Accepted Answer

The answer of Oak Company produces a chair that requires...

Question 7

What is the direct labor time variance?

Accepted Answer

A)  $7,700 favorable 
B)  $7,700 unfavorable 
C)  $11,200 unfavorable 
D)  $11,200 favorable 
A)  $7,700 favorable 
B)  $7,700 unfavorable 
C)  $11,200 unfavorable 
D)  $11,200 favorable

Question 8

The following data is given for the Stringer Company:   Overhead is applied on standard labor hours.
-The materials price variance is

Accepted Answer

A)  $0 
B)  $59,400 unfavorable 
C)  $59,400 favorable 
D)  $6,000 unfavorable 
A)  $0 
B)  $59,400 unfavorable 
C)  $59,400 favorable 
D)  $6,000 unfavorable

Question 9

Match the following descriptions with the term a-e) it describes:
-theoretical standard

Accepted Answer

A) Ideal standard 
B) Nonfinancial performance measure 
C) Currently attainable standard 
D) Unfavorable cost variance 
E) Favorable cost variance 
A) Ideal standard 
B) Nonfinancial performance measure 
C) Currently attainable standard 
D) Unfavorable cost variance 
E) Favorable cost variance

Question 10

If employees are given bonuses for exceeding normal standards, the standards may be very effective in motivating employees.

Accepted Answer

A) True 
 B)False

Question 11

Japan Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour. Production of 7,700 units required 19,250 hours at an hourly rate of $14.90 per hour.
What is the direct labor a) rate variance, b) time variance, and c) total cost variance?

Accepted Answer

a) Rate variance = $14.90 - $1

Question 12

The fact that workers are unable to meet a properly determined direct labor standard is sufficient cause to change the standard.

Accepted Answer

A) True 
 B)False

Question 13

Aquatic Corp.'s standard material requirement to produce one Model 2000 is 15 pounds of material @ $110.00 per pound. Last month, Aquatic purchased 170,000 pounds of material at a total cost of $17,850,000. It used 162,000 pounds to produce 10,000 units of Model 2000.
Calculate the materials price variance and materials quantity variance, and indicate whether each variance is favorable or unfavorable.

Accepted Answer

Actual cost = $17,850,000/170,000 pounds

Question 14

Hsu Company produces a part with a standard of 5 yards of material per unit. The standard price of one yard of material is $8.50. During the month, 8,800 parts were manufactured, using 45,700 yards of material at a cost of $8.30.
Determine the a) price variance, b) quantity variance, and c) cost variance.

Accepted Answer

a) Price variance = $8.30 - $8

Question 15

The formula to compute the direct materials price variance is to calculate the difference between

Accepted Answer

A)  Actual costs - Actual quantity × Standard price) 
B)  Actual cost + Standard costs 
C)  Actual cost - Standard costs 
D)  Actual quantity × Standard price) - Standard costs 
A)  Actual costs - Actual quantity × Standard price) 
B)  Actual cost + Standard costs 
C)  Actual cost - Standard costs 
D)  Actual quantity × Standard price) - Standard costs

Question 16

Match the following formulas or descriptions with the term a-e) it defines.
-Actual rate per hour - Standard rate per hour) × Actual hours

Accepted Answer

A) Direct materials price variance 
B) Direct labor rate variance 
C) Direct labor time variance 
D) Direct materials quantity variance 
E) Budgeted variable factory overhead 
A) Direct materials price variance 
B) Direct labor rate variance 
C) Direct labor time variance 
D) Direct materials quantity variance 
E) Budgeted variable factory overhead

Question 17

The difference between the standard cost of a product and its actual cost is called a variance.

Accepted Answer

A) True 
 B)False

Question 18

Match the following formulas or descriptions with the term a-e) it defines.
-Actual quantity - Standard quantity) × Standard price

Accepted Answer

A) Direct materials price variance 
B) Direct labor rate variance 
C) Direct labor time variance 
D) Direct materials quantity variance 
E) Budgeted variable factory overhead 
A) Direct materials price variance 
B) Direct labor rate variance 
C) Direct labor time variance 
D) Direct materials quantity variance 
E) Budgeted variable factory overhead

Question 19

Match the following descriptions with the term a-e) it describes:
-normal standard

Accepted Answer

A) Ideal standard 
B) Nonfinancial performance measure 
C) Currently attainable standard 
D) Unfavorable cost variance 
E) Favorable cost variance 
A) Ideal standard 
B) Nonfinancial performance measure 
C) Currently attainable standard 
D) Unfavorable cost variance 
E) Favorable cost variance

Question 20

It is correct to rely exclusively on past cost data when establishing standards.

Accepted Answer

A) True 
 B)False

Exam 22: Performance Evaluation Using Variances From Standard Costs

Standard costs should always be revised when they differ from actual costs.

The formula to the compute direct labor time variance is to calculate the difference between

Which of the following is not a reason standard costs are separated into two components?

The formula to compute the direct material quantity variance is to calculate the difference between

A company must choose either a standard system or nonfinancial performance measures to evaluate the performance of a company.

Oak Company produces a chair that requires 6 yards of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 48,875 yards. Journalize the entry to record the standard direct materials used in production.

What is the direct labor time variance?

The following data is given for the Stringer Company: Overhead is applied on standard labor hours. -The materials price variance is

Match the following descriptions with the term a-e) it describes: -theoretical standard

If employees are given bonuses for exceeding normal standards, the standards may be very effective in motivating employees.

Japan Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour. Production of 7,700 units required 19,250 hours at an hourly rate of $14.90 per hour. What is the direct labor a) rate variance, b) time variance, and c) total cost variance?

The fact that workers are unable to meet a properly determined direct labor standard is sufficient cause to change the standard.

The formula to compute the direct materials price variance is to calculate the difference between

Match the following formulas or descriptions with the term a-e) it defines. -Actual rate per hour - Standard rate per hour) × Actual hours

The difference between the standard cost of a product and its actual cost is called a variance.

Match the following formulas or descriptions with the term a-e) it defines. -Actual quantity - Standard quantity) × Standard price

Match the following descriptions with the term a-e) it describes: -normal standard

It is correct to rely exclusively on past cost data when establishing standards.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation for Decentralized Operations

Differential Analysis, Product Pricing, and Activity-Based Costing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Lean Principles, Lean Accounting, and Activity Analysis

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