Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The materials price standard is based on the purchasing department's best estimate of the cost of raw materials.

Accepted Answer

A) True 
 B)False

Question 3

Standard costs

Accepted Answer

A)  may show past cost experience. 
B)  help establish expected future costs. 
C)  are the budgeted cost per unit in the present. 
D)  All of these answers are correct. 
A)  may show past cost experience. 
B)  help establish expected future costs. 
C)  are the budgeted cost per unit in the present. 
D)  All of these answers are correct.

Question 4

Budget data are not journalized in cost accounting systems with the exception of

Accepted Answer

A)  the application of manufacturing overhead. 
B)  direct labor budgets. 
C)  direct materials budgets. 
D)  cash budget data. 
A)  the application of manufacturing overhead. 
B)  direct labor budgets. 
C)  direct materials budgets. 
D)  cash budget data.

Question 5

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 6

A company purchases 12,000 pounds of materials. The materials price variance is $6,000 favorable. What is the difference between the standard and actual price paid for the materials?

Accepted Answer

A)  $1.00 
B)  $.50 
C)  $2.00 
D)  $6.00 
A)  $1.00 
B)  $.50 
C)  $2.00 
D)  $6.00

Question 7

The balanced scorecard

Accepted Answer

A)  incorporates financial and nonfinancial measures in an integrated system. 
B)  is based solely on financial measures. 
C)  is based solely on nonfinancial measures. 
D)  does not use financial or nonfinancial measures. 
A)  incorporates financial and nonfinancial measures in an integrated system. 
B)  is based solely on financial measures. 
C)  is based solely on nonfinancial measures. 
D)  does not use financial or nonfinancial measures.

Question 8

A credit to a Materials Quantity Variance account indicates that the actual quantity of direct materials used was greater than the standard quantity of direct materials allowed.

Accepted Answer

A) True 
 B)False

Question 9

What does the controllable variance measure?

Accepted Answer

A)  Whether a company incurred more or less fixed overhead costs compared to the amount of overhead applied 
B)  Whether a company incurred more or less overhead costs than allowed 
C)  The efficiency of using variable overhead resources 
D)  Whether the production manager is able to control the production facility 
A)  Whether a company incurred more or less fixed overhead costs compared to the amount of overhead applied 
B)  Whether a company incurred more or less overhead costs than allowed 
C)  The efficiency of using variable overhead resources 
D)  Whether the production manager is able to control the production facility

Question 10

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 11

The overhead controllable variance relates primarily to fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 12

A standard cost system may be used with a job order cost system but not with a process cost system.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

The cost of freight-in

Accepted Answer

A)  is to be included in the standard cost of direct materials. 
B)  is considered a selling expense. 
C)  should have a separate standard apart from direct materials. 
D)  should not be included in a standard cost system. 
A)  is to be included in the standard cost of direct materials. 
B)  is considered a selling expense. 
C)  should have a separate standard apart from direct materials. 
D)  should not be included in a standard cost system.

Question 16

Use the following information for questions 
Budgeted overhead for Cinnabar Industries at normal capacity of 30,000 direct labor hours is $6 per hour variable and $4 per hour fixed. In May, $310,000 of overhead was incurred in working 31,500 hours when 32,000 standard hours were allowed.
-The overhead controllable variance is

Accepted Answer

A)  $5,000 favorable. 
B)  $2,000 favorable. 
C)  $10,000 favorable. 
D)  $10,000 unfavorable. 
A)  $5,000 favorable. 
B)  $2,000 favorable. 
C)  $10,000 favorable. 
D)  $10,000 unfavorable.

Question 17

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 18

The investigation of materials price variance usually begins in the

Accepted Answer

A)  first production department. 
B)  purchasing department. 
C)  controller's office. 
D)  accounts payable department. 
A)  first production department. 
B)  purchasing department. 
C)  controller's office. 
D)  accounts payable department.

Question 19

Shipp, Inc. manufactures a product requiring two pounds of direct material. During 2019, Shipp purchases 24,000 pounds of material for $99,200 when the standard price per pound is $4. During 2019, Shipp uses 22,000 pounds to make 12,000 products. The standard direct material cost per unit of finished product is

Accepted Answer

A)  $8.27. 
B)  $9.01. 
C)  $8.00. 
D)  $8.53. 
A)  $8.27. 
B)  $9.01. 
C)  $8.00. 
D)  $8.53.

Question 20

An unfavorable materials quantity variance would occur if

Accepted Answer

A)  more materials were purchased than were used. 
B)  actual pounds of materials used were less than the standard pounds allowed. 
C)  actual labor hours used were greater than the standard labor hours allowed. 
D)  actual pounds of materials used were greater than the standard pounds allowed. 
A)  more materials were purchased than were used. 
B)  actual pounds of materials used were less than the standard pounds allowed. 
C)  actual labor hours used were greater than the standard labor hours allowed. 
D)  actual pounds of materials used were greater than the standard pounds allowed.

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

The materials price standard is based on the purchasing department's best estimate of the cost of raw materials.

Standard costs

Budget data are not journalized in cost accounting systems with the exception of

The total materials variance is equal to the

A company purchases 12,000 pounds of materials. The materials price variance is $6,000 favorable. What is the difference between the standard and actual price paid for the materials?

The balanced scorecard

A credit to a Materials Quantity Variance account indicates that the actual quantity of direct materials used was greater than the standard quantity of direct materials allowed.

What does the controllable variance measure?

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

The overhead controllable variance relates primarily to fixed overhead costs.

A standard cost system may be used with a job order cost system but not with a process cost system.

Most companies that use standards set them at

When is a variance considered to be 'material'?

The cost of freight-in

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

The investigation of materials price variance usually begins in the

An unfavorable materials quantity variance would occur if

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 11: Standard Costs and Balanced Scorecard

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

The materials price standard is based on the purchasing department's best estimate of the cost of raw materials.

Standard costs

Budget data are not journalized in cost accounting systems with the exception of

The total materials variance is equal to the

A company purchases 12,000 pounds of materials. The materials price variance is $6,000 favorable. What is the difference between the standard and actual price paid for the materials?

The balanced scorecard

A credit to a Materials Quantity Variance account indicates that the actual quantity of direct materials used was greater than the standard quantity of direct materials allowed.

What does the controllable variance measure?

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

The overhead controllable variance relates primarily to fixed overhead costs.

A standard cost system may be used with a job order cost system but not with a process cost system.

Most companies that use standards set them at

When is a variance considered to be 'material'?

The cost of freight-in

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

The investigation of materials price variance usually begins in the

An unfavorable materials quantity variance would occur if

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters