Question 1

Inventories cannot be valued at standard cost in financial statements.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Information on Jayhawk's direct labor costs for the month of August is as follows: $\begin{array}{lr}
\text { Actual rate } & \$ 10 \
\text { Standard hours } & 11,000 \
\text { Actual hours } & 10,000 \
\text { Direct labor price variance\_unfavorable } & \$ 4.000\
\end{array}$
What was the standard rate for August?

Accepted Answer

A)  $9.96 
B) $9.60 
C) $10.40 
D) $10.04 
A)  $9.96 
B) $9.60 
C) $10.40 
D) $10.04

Question 4

Parnell Company prepared its income statement for internal use.How would amounts for cost of goods sold and variances appear?

Accepted Answer

A) Cost of goods sold would be at actual costs, and variances would be reported separately. 
B) Cost of goods sold would be combined with the variances, and the net amount reported at standard cost. 
C) Cost of goods sold would be at standard costs, and variances would be reported separately. 
D) Cost of goods sold would be combined with the variances, and the net amount reported at actual cost. 
A) Cost of goods sold would be at actual costs, and variances would be reported separately. 
B) Cost of goods sold would be combined with the variances, and the net amount reported at standard cost. 
C) Cost of goods sold would be at standard costs, and variances would be reported separately. 
D) Cost of goods sold would be combined with the variances, and the net amount reported at actual cost.

Question 5

If a company is concerned with the potential negative effects of establishing standards, it 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 6

The direct materials price standard should include an amount for all of the following except

Accepted Answer

A) receiving costs. 
B) storing costs. 
C) handling costs. 
D) normal spoilage costs. 
A) receiving costs. 
B) storing costs. 
C) handling costs. 
D) normal spoilage costs.

Question 7

A debit to the Overhead Volume Variance account indicates that the standard hours allowed for the output produced was greater than the standard hours at normal capacity.

Accepted Answer

A) True 
 B)False

Question 8

Scorpion Production Company planned to use 1 yard of plastic per unit budgeted at $81 a yard.However, the plastic actually cost $80 per yard.The company actually made 3,900 units, although it had planned to make only 3,300 units.Total yards used for production were 3,960.How much is the total materials variance?

Accepted Answer

A) $48,600 U 
B) $4,860 U 
C) $3,960 F 
D) $900 U 
A) $48,600 U 
B) $4,860 U 
C) $3,960 F 
D) $900 U

Question 9

Variance analysis facilitates the principle of "management by exception."

Accepted Answer

A) True 
 B)False

Question 10

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 11

The standard number of hours that should have been worked for the output attained is 10,000 direct labor hours and the actual number of direct labor hours worked was 10,500.If the direct labor price variance was $10,500 unfavorable, and the standard rate of pay was $12 per direct labor hour, what was the actual rate of pay for direct labor?

Accepted Answer

A) $11 per direct labor hour 
B) $9 per direct labor hour 
C) $13 per direct labor hour 
D) $12 per direct labor hour 
A) $11 per direct labor hour 
B) $9 per direct labor hour 
C) $13 per direct labor hour 
D) $12 per direct labor hour

Question 12

Ideal standards will generally result in favorable variances for the company.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

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 16

The overhead controllable variance relates primarily to fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 17

The standard number of hours that should have been worked for the output attained is 6,000 direct labor hours and the actual number of direct labor hours worked was 6,300.If the direct labor price variance was $3,150 unfavorable, and the standard rate of pay was $9 per direct labor hour, what was the actual rate of pay for direct labor?

Accepted Answer

A) $8.50 per direct labor hour 
B) $7.50 per direct labor hour 
C) $9.50 per direct labor hour 
D) $9.00 per direct labor hour 
A) $8.50 per direct labor hour 
B) $7.50 per direct labor hour 
C) $9.50 per direct labor hour 
D) $9.00 per direct labor hour

Question 18

Which of the following is true?

Accepted Answer

A) The form, content, and frequency of variance reports vary considerably among companies. 
B) The form, content, and frequency of variance reports do not vary among companies. 
C) The form and content of variance reports vary considerably among companies, but the frequency is always weekly. 
D) The form and content of variance reports are consistent among companies, but the frequency varies. 
A) The form, content, and frequency of variance reports vary considerably among companies. 
B) The form, content, and frequency of variance reports do not vary among companies. 
C) The form and content of variance reports vary considerably among companies, but the frequency is always weekly. 
D) The form and content of variance reports are consistent among companies, but the frequency varies.

Question 19

Monster Company produces a product requiring 3 direct labor hours at $16.00 per hour.During January, 2,000 products are produced using 6,300 direct labor hours.Monster's actual payroll during January was $98,280.What is the labor quantity variance?

Accepted Answer

A) $2,280 U 
B) $4,800 F 
C) $2,520 F 
D) $4,800 U 
A) $2,280 U 
B) $4,800 F 
C) $2,520 F 
D) $4,800 U

Question 20

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.

Inventories cannot be valued at standard cost in financial statements.

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

Information on Jayhawk's direct labor costs for the month of August is as follows: Actual rate \ 10 Standard hours 11,000 Actual hours 10,000 Direct labor price variance\_unfavorable \ 4.000 What was the standard rate for August?

Parnell Company prepared its income statement for internal use.How would amounts for cost of goods sold and variances appear?

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

The direct materials price standard should include an amount for all of the following except

A debit to the Overhead Volume Variance account indicates that the standard hours allowed for the output produced was greater than the standard hours at normal capacity.

Variance analysis facilitates the principle of "management by exception."

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

Ideal standards will generally result in favorable variances for the company.

The investigation of materials price variance usually begins in the

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

The overhead controllable variance relates primarily to fixed overhead costs.

Which of the following is true?

Monster Company produces a product requiring 3 direct labor hours at $16.00 per hour.During January, 2,000 products are produced using 6,300 direct labor hours.Monster's actual payroll during January was $98,280.What is the labor quantity variance?

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

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money and Present Value Calculations

Filters

Exam 11: Reporting and Analyzing Stockholders Equity

Inventories cannot be valued at standard cost in financial statements.

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

Information on Jayhawk's direct labor costs for the month of August is as follows: Actual rate \ 10 Standard hours 11,000 Actual hours 10,000 Direct labor price variance\_unfavorable \ 4.000 What was the standard rate for August?

Parnell Company prepared its income statement for internal use.How would amounts for cost of goods sold and variances appear?

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

The direct materials price standard should include an amount for all of the following except

A debit to the Overhead Volume Variance account indicates that the standard hours allowed for the output produced was greater than the standard hours at normal capacity.

Variance analysis facilitates the principle of "management by exception."

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

Ideal standards will generally result in favorable variances for the company.

The investigation of materials price variance usually begins in the

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

The overhead controllable variance relates primarily to fixed overhead costs.

Which of the following is true?

Monster Company produces a product requiring 3 direct labor hours at $16.00 per hour.During January, 2,000 products are produced using 6,300 direct labor hours.Monster's actual payroll during January was $98,280.What is the labor quantity variance?

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

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money and Present Value Calculations

Filters