Question 1

The formula for the materials price variance is

Accepted Answer

A)  (AQ × SP) - (SQ × SP). 
B)  (AQ × AP) - (AQ × SP). 
C)  (AQ × AP) - (SQ × SP). 
D)  (AQ × SP) - (SQ × AP). 
A)  (AQ × SP) - (SQ × SP). 
B)  (AQ × AP) - (AQ × SP). 
C)  (AQ × AP) - (SQ × SP). 
D)  (AQ × SP) - (SQ × AP).

Question 2

The standard number of hours allowed times the predetermined overhead rate is the amount of ________________ to the products produced.

Accepted Answer

The answer of The standard number of hours allowed times...

Question 3

Using standard costs

Accepted Answer

A)  makes employees less "cost-conscious." 
B)  provides a basis for evaluating cost control. 
C)  makes management by exception more difficult. 
D)  increases clerical costs. 
A)  makes employees less "cost-conscious." 
B)  provides a basis for evaluating cost control. 
C)  makes management by exception more difficult. 
D)  increases clerical costs.

Question 4

Manufacturing overhead costs are applied to work in process on the basis of

Accepted Answer

A)  actual hours worked. 
B)  standard hours allowed. 
C)  ratio of actual variable to fixed costs. 
D)  actual overhead costs incurred. 
A)  actual hours worked. 
B)  standard hours allowed. 
C)  ratio of actual variable to fixed costs. 
D)  actual overhead costs incurred.

Question 5

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 6

Ideal standards

Accepted Answer

A)  are rigorous but attainable. 
B)  are the standards generally used in a master budget. 
C)  reflect optimal performance under perfect operating conditions. 
D)  will always motivate employees to achieve the maximum output. 
A)  are rigorous but attainable. 
B)  are the standards generally used in a master budget. 
C)  reflect optimal performance under perfect operating conditions. 
D)  will always motivate employees to achieve the maximum output.

Question 7

Aztec, Inc.'s standard labor cost of producing one unit of product is 2 hours at the rate of $14.00 per hour. During February, 52,000 hours of labor are incurred at a cost of $13.80 per hour to produce 25,000 units of product.
Instructions
(a) Compute the labor price and labor quantity variances.
(b) Journalize the incurrence of the labor costs and the assignment of direct labor to production, assuming a standard cost system is used.

Accepted Answer

The answer of Aztec, Inc.'s standard labor cost of producing...

Question 8

The overhead volume variance relates only to fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 9

A standard which represents an efficient level of performance that is attainable under expected operating conditions is called a(n)

Accepted Answer

A)  ideal standard. 
B)  loose standard. 
C)  tight standard. 
D)  normal standard. 
A)  ideal standard. 
B)  loose standard. 
C)  tight standard. 
D)  normal standard.

Question 10

A company uses 40,000 gallons of materials for which they paid $7.00 a gallon. The materials price variance was $80,000 favorable. What is the standard price per gallon?

Accepted Answer

A)  $2 
B)  $5 
C)  $7 
D)  $9 
A)  $2 
B)  $5 
C)  $7 
D)  $9

Question 11

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 total materials variance is

Accepted Answer

A)  $2,400 U. 
B)  $2,400 F. 
C)  $2,520 U. 
D)  $2,520 F. 
A)  $2,400 U. 
B)  $2,400 F. 
C)  $2,520 U. 
D)  $2,520 F.

Question 12

A manufacturing company would include setup and downtime in their direct

Accepted Answer

A)  materials price standard. 
B)  materials quantity standard. 
C)  labor price standard. 
D)  labor quantity standard. 
A)  materials price standard. 
B)  materials quantity standard. 
C)  labor price standard. 
D)  labor quantity standard.

Question 13

What is a standard cost?

Accepted Answer

A)  The total number of units times the budgeted amount expected 
B)  Any amount that appears on a budget 
C)  The total amount that appears on the budget for product costs 
D)  The amount management thinks should be incurred to produce a good or service 
A)  The total number of units times the budgeted amount expected 
B)  Any amount that appears on a budget 
C)  The total amount that appears on the budget for product costs 
D)  The amount management thinks should be incurred to produce a good or service

Question 14

Labor data for making one pound of finished product in Curling Co. are as follows: (1) Price-hourly wage rate $11.00, payroll taxes $1.80, and fringe benefits $1.20. (2) Quantity-actual production time 1.1 hours, rest periods and clean up 0.25 hours, and setup and downtime 0.15 hours.
Instructions
Compute the following.
(a) Standard direct labor rate per hour.
(b) Standard direct labor hours per pound.
(c) Standard cost per pound.

Accepted Answer

(a) Standard direct labor rate per hour

Question 15

Use the following information for questions .
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 labor rate per hour is

Accepted Answer

A)  $ 12.00. 
B)  $ 12.30. 
C)  $15.60. 
D)  $15.90. 
A)  $ 12.00. 
B)  $ 12.30. 
C)  $15.60. 
D)  $15.90.

Question 16

The use of an inexperienced worker instead of an experienced employee can result in a favorable labor price variance but probably an unfavorable quantity variance.

Accepted Answer

A) True 
 B)False

Question 17

Once set, normal standards should not be changed during the year.

Accepted Answer

A) True 
 B)False

Question 18

All of the following are advantages of standard costs except they

Accepted Answer

A)  facilitate management planning. 
B)  are useful in setting selling prices. 
C)  simplify costing in inventories. 
D)  increase net income. 
A)  facilitate management planning. 
B)  are useful in setting selling prices. 
C)  simplify costing in inventories. 
D)  increase net income.

Question 19

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 20

A managerial accountant
1) does not participate in the standard setting process.
2) provides knowledge of cost behaviors in the standard setting process.
3) provides input of historical costs to the standard setting process.

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  2 and 3 
A)  1 
B)  2 
C)  3 
D)  2 and 3

Exam 24: Standard Costs and Balanced Scorecard

The formula for the materials price variance is

The standard number of hours allowed times the predetermined overhead rate is the amount of ________________ to the products produced.

Using standard costs

Manufacturing overhead costs are applied to work in process on the basis of

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.

Ideal standards

The overhead volume variance relates only to fixed overhead costs.

A standard which represents an efficient level of performance that is attainable under expected operating conditions is called a(n)

A company uses 40,000 gallons of materials for which they paid $7.00 a gallon. The materials price variance was $80,000 favorable. What is the standard price per gallon?

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 total materials variance is

A manufacturing company would include setup and downtime in their direct

What is a standard cost?

The use of an inexperienced worker instead of an experienced employee can result in a favorable labor price variance but probably an unfavorable quantity variance.

Once set, normal standards should not be changed during the year.

All of the following are advantages of standard costs except they

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

A managerial accountant 1) does not participate in the standard setting process. 2) provides knowledge of cost behaviors in the standard setting process. 3) provides input of historical costs to the standard setting process.

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

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