Question 1

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are

Accepted Answer

A) separately disclosed. 
B) deducted as other expenses and revenues. 
C) added to cost of goods sold. 
D) closed directly to retained earnings. 
A) separately disclosed. 
B) deducted as other expenses and revenues. 
C) added to cost of goods sold. 
D) closed directly to retained earnings.

Question 2

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 stockholders 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 stockholders is required.

Question 3

Use the following information for questions 
A company developed the following per-unit standards for its product: 5 kilograms of direct materials at $3 per kilogram.Last month, 1,000 kilograms of direct materials were purchased for $2,900.Also last month, 700 kilograms of direct materials were used to produce 135 units.
-What was the direct materials quantity variance for last month?

Accepted Answer

A) $75 unfavourable 
B) $75 favourable 
C) $900 unfavourable 
D) $900 favourable 
A) $75 unfavourable 
B) $75 favourable 
C) $900 unfavourable 
D) $900 favourable

Question 4

There could be instances where the production department is responsible for a direct materials price variance.

Accepted Answer

A) True 
 B)False

Question 5

Normal standards incorporate normal contingencies of production into the standards.

Accepted Answer

A) True 
 B)False

Question 6

The total materials variance is equal to the

Accepted Answer

A) materials price variance. 
B) difference between the materials price variance and materials quantity variance. 
C) product of the materials price variance and the materials quantity variance. 
D) sum of the materials price variance and the materials quantity variance. 
A) materials price variance. 
B) difference between the materials price variance and materials quantity variance. 
C) product of the materials price variance and the materials quantity variance. 
D) sum of the materials price variance and the materials quantity variance.

Question 7

If the standard hours allowed are less than the standard hours at normal capacity, the volume variance

Accepted Answer

A) cannot be calculated. 
B) will be favourable. 
C) will be unfavourable. 
D) will be greater than the spending variance. 
A) cannot be calculated. 
B) will be favourable. 
C) will be unfavourable. 
D) will be greater than the spending variance.

Question 8

An unfavourable labour quantity variance may be caused by

Accepted Answer

A) paying workers higher wages than expected. 
B) paying workers a bonus at year-end. 
C) worker fatigue or carelessness. 
D) higher pay rates mandated by union contracts. 
A) paying workers higher wages than expected. 
B) paying workers a bonus at year-end. 
C) worker fatigue or carelessness. 
D) higher pay rates mandated by union contracts.

Question 9

If production exceeds normal capacity, the overhead volume variance will be favourable.

Accepted Answer

A) True 
 B)False

Question 10

If a company is concerned with the potential negative effects of establishing standards, they should

Accepted Answer

A) set loose standards that are easy to fulfill. 
B) offer wage incentives to those meeting standards. 
C) not employ any standards. 
D) set tight standards in order to motivate people. 
A) set loose standards that are easy to fulfill. 
B) offer wage incentives to those meeting standards. 
C) not employ any standards. 
D) set tight standards in order to motivate people.

Question 11

It is possible that a company's financial statements may report inventories at

Accepted Answer

A) budgeted costs. 
B) standard costs. 
C) both budgeted and standard costs. 
D) none of these. 
A) budgeted costs. 
B) standard costs. 
C) both budgeted and standard costs. 
D) none of these.

Question 12

Which of the following could cause a debit balance in the direct material price variance accounts?

Accepted Answer

A) Paying more than the standard price per unit for direct material 
B) Paying less than the standard price per unit for direct material 
C) Using more than the standard quantity of direct material 
D) Using less than the standard quantity of direct material 
A) Paying more than the standard price per unit for direct material 
B) Paying less than the standard price per unit for direct material 
C) Using more than the standard quantity of direct material 
D) Using less than the standard quantity of direct material

Question 13

Standard cost is the industry average cost for a particular item.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A materials quantity variance is calculated as the difference between the standard direct materials price and the actual direct materials price multiplied by the actual quantity of direct materials used.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The labour 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 18

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 19

The per-unit standards for direct labour are 3 direct labour hours at $15 per hour.If in producing 700 units, the actual direct labour cost was $31,175 for 2,150 direct labour hours worked, the total direct labour variance is

Accepted Answer

A) $50 unfavourable. 
B) $325 favourable. 
C) $50 favourable. 
D) $325 unfavourable. 
A) $50 unfavourable. 
B) $325 favourable. 
C) $50 favourable. 
D) $325 unfavourable.

Question 20

Standard costs may be used by

Accepted Answer

A) universities. 
B) governmental agencies. 
C) charitable organizations. 
D) all of these. 
A) universities. 
B) governmental agencies. 
C) charitable organizations. 
D) all of these.

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are

If standard costs are incorporated into the accounting system,

There could be instances where the production department is responsible for a direct materials price variance.

Normal standards incorporate normal contingencies of production into the standards.

The total materials variance is equal to the

If the standard hours allowed are less than the standard hours at normal capacity, the volume variance

An unfavourable labour quantity variance may be caused by

If production exceeds normal capacity, the overhead volume variance will be favourable.

If a company is concerned with the potential negative effects of establishing standards, they should

It is possible that a company's financial statements may report inventories at

Which of the following could cause a debit balance in the direct material price variance accounts?

Standard cost is the industry average cost for a particular item.

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

A materials quantity variance is calculated as the difference between the standard direct materials price and the actual direct materials price multiplied by the actual quantity of direct materials used.

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

The labour time requirements for standards may be determined by the

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

The per-unit standards for direct labour are 3 direct labour hours at $15 per hour.If in producing 700 units, the actual direct labour cost was $31,175 for 2,150 direct labour hours worked, the total direct labour variance is

Standard costs may be used by

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job Order Costing

Process Costing

Activity-Based-Costing

Cost-Volume-Profit

Incremental Analysis

Variable Costing: a Decision-Making Perspective

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Planning for Capital Investments

Filters

Exam 12: Standard Costs and Balanced Scorecard

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are

If standard costs are incorporated into the accounting system,

There could be instances where the production department is responsible for a direct materials price variance.

Normal standards incorporate normal contingencies of production into the standards.

The total materials variance is equal to the

If the standard hours allowed are less than the standard hours at normal capacity, the volume variance

An unfavourable labour quantity variance may be caused by

If production exceeds normal capacity, the overhead volume variance will be favourable.

If a company is concerned with the potential negative effects of establishing standards, they should

It is possible that a company's financial statements may report inventories at

Which of the following could cause a debit balance in the direct material price variance accounts?

Standard cost is the industry average cost for a particular item.

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

A materials quantity variance is calculated as the difference between the standard direct materials price and the actual direct materials price multiplied by the actual quantity of direct materials used.

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

The labour time requirements for standards may be determined by the

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

The per-unit standards for direct labour are 3 direct labour hours at $15 per hour.If in producing 700 units, the actual direct labour cost was $31,175 for 2,150 direct labour hours worked, the total direct labour variance is

Standard costs may be used by

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job Order Costing

Process Costing

Activity-Based-Costing

Cost-Volume-Profit

Incremental Analysis

Variable Costing: a Decision-Making Perspective

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Planning for Capital Investments

Filters