Question 1

Inventories cannot be valued at standard cost in financial statements.

Accepted Answer

A) True 
 B)False

Question 2

A direct labor price standard is frequently called the direct labor efficiency standard.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements about standard costs is false?

Accepted Answer

A)  Properly set standards should promote efficiency. 
B)  Standard costs facilitate management planning. 
C)  Standards should not be used in "management by exception." 
D)  Standard costs can simplify the costing of inventories. 
A)  Properly set standards should promote efficiency. 
B)  Standard costs facilitate management planning. 
C)  Standards should not be used in "management by exception." 
D)  Standard costs can simplify the costing of inventories.

Question 4

Purvis Manufacturing, which produces a single product, has prepared the following standard cost sheet for one unit of the product.
Direct materials (6 pounds at $2 per pound) $12
Direct labor (2 hours at $12 per hour) $24
During the month of April, the company manufactures 300 units and incurs the following actual costs.
Direct materials purchased and used (1,850 pounds) $4,070
Direct labor (620 hours) $7,130
Instructions
Compute the total, price, and quantity variances for materials and labor.

Accepted Answer

Total materials variance:
(AQ * AP ) - (

Question 5

The overhead controllable variance relates primarily to fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 6

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 7

If actual direct materials costs are greater than standard direct materials costs, it means that

Accepted Answer

A)  actual costs were calculated incorrectly. 
B)  the actual unit price of direct materials was greater than the standard unit price of direct materials. 
C)  the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected. 
D)  the purchasing agent or the production foreman is inefficient. 
A)  actual costs were calculated incorrectly. 
B)  the actual unit price of direct materials was greater than the standard unit price of direct materials. 
C)  the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected. 
D)  the purchasing agent or the production foreman is inefficient.

Question 8

Prescott Manufacturing manufactures widgets for distribution. The standard costs for the manufacture of widgets follow:
Budgeted factory overhead was $640,000. Overhead applied is based on widgets produced. The company estimated that 10,000 widgets would be produced; however, only 9,600 were produced.
Instructions
Calculate the following amounts.
1. Rate at which total factory overhead is applied
2. Materials price variance
3. Total materials variance
4. Overhead volume variance
5. Overhead controllable variance

Accepted Answer

1. Budgeted overhead cost/budgeted activ

Question 9

A ________________ is expressed as a unit amount, whereas a _________________ is expressed as a total amount.

Accepted Answer

The answer of A ________________ is expressed as a unit...

Question 10

The direct materials quantity standard should

Accepted Answer

A)  exclude unavoidable waste. 
B)  exclude quality considerations. 
C)  allow for normal spoilage. 
D)  always be expressed as an ideal standard. 
A)  exclude unavoidable waste. 
B)  exclude quality considerations. 
C)  allow for normal spoilage. 
D)  always be expressed as an ideal standard.

Question 11

A company developed the following per-unit standards for its product: 2 gallons of direct materials at $8 per gallon. Last month, 3,000 gallons of direct materials were purchased for $22,800. The direct materials price variance for last month was

Accepted Answer

A)  $22,800 favorable. 
B)  $600 favorable. 
C)  $1,200 favorable. 
D)  $1,200 unfavorable. 
A)  $22,800 favorable. 
B)  $600 favorable. 
C)  $1,200 favorable. 
D)  $1,200 unfavorable.

Question 12

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 13

Marburg Co. expects direct materials cost of $6 per unit for 100,000 units (a total of $600,000 of direct materials costs). Marburg's standard direct materials cost and budgeted direct materials cost is
Standard Budgeted

Accepted Answer

A)  $6 per unit $600,000 per year 
B)  $6 per unit $6 per unit 
C)  $600,000 per year $6 per unit 
D)  $600,000 per year $600,000 per year 
A)  $6 per unit $600,000 per year 
B)  $6 per unit $6 per unit 
C)  $600,000 per year $6 per unit 
D)  $600,000 per year $600,000 per year

Question 14

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon's total variance is

Accepted Answer

A)  $450 F. 
B)  $135 U. 
C)  $465 U. 
D)  $600 U. 
A)  $450 F. 
B)  $135 U. 
C)  $465 U. 
D)  $600 U.

Question 15

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 16

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 price variance is

Accepted Answer

A)  $770 U. 
B)  $800 U. 
C)  $1,030 F. 
D)  $1,930 F. 
A)  $770 U. 
B)  $800 U. 
C)  $1,030 F. 
D)  $1,930 F.

Question 17

A standard is a unit amount, whereas a budget is a total amount.

Accepted Answer

A) True 
 B)False

Question 18

The standard predetermined overhead rate used in setting the standard overhead cost is determined by dividing

Accepted Answer

A)  budgeted overhead costs by an expected standard activity index. 
B)  actual overhead costs by an expected standard activity index. 
C)  budgeted overhead costs by actual activity. 
D)  actual overhead costs by actual activity. 
A)  budgeted overhead costs by an expected standard activity index. 
B)  actual overhead costs by an expected standard activity index. 
C)  budgeted overhead costs by actual activity. 
D)  actual overhead costs by actual activity.

Question 19

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 20

Allowances should not be made in the direct labor quantity standard for

Accepted Answer

A)  wasted time. 
B)  rest periods. 
C)  cleanup. 
D)  machine downtime. 
A)  wasted time. 
B)  rest periods. 
C)  cleanup. 
D)  machine downtime.

Exam 24: Standard Costs and Balanced Scorecard

Inventories cannot be valued at standard cost in financial statements.

A direct labor price standard is frequently called the direct labor efficiency standard.

Which of the following statements about standard costs is false?

The overhead controllable variance relates primarily to fixed overhead costs.

Which of the following statements is true?

If actual direct materials costs are greater than standard direct materials costs, it means that

A ________________ is expressed as a unit amount, whereas a _________________ is expressed as a total amount.

The direct materials quantity standard should

A company developed the following per-unit standards for its product: 2 gallons of direct materials at $8 per gallon. Last month, 3,000 gallons of direct materials were purchased for $22,800. The direct materials price variance for last month was

Variances from standards are

Marburg Co. expects direct materials cost of $6 per unit for 100,000 units (a total of $600,000 of direct materials costs). Marburg's standard direct materials cost and budgeted direct materials cost is Standard Budgeted

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon's total variance is

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

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 price variance is

A standard is a unit amount, whereas a budget is a total amount.

The standard predetermined overhead rate used in setting the standard overhead cost is determined by dividing

Standard costs

Allowances should not be made in the direct labor quantity standard for

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations Perpetual Approach

Inventories Periodic Approach

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, and Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

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

Time Value of Money

Investments

Payroll Accounting

Subsidiary Ledgers and Special Journals

Other Significant Liabilities

Filters

A is expressed as a unit amount, whereas a _ is expressed as a total amount.