Question 1

Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits for using standard costs?

Accepted Answer

A) They are used to indicate where changes in technology and machinery need to be made. 
B) They are used to estimate the cost of inventory. 
C) They are used to plan direct materials, direct labor, and variable factory overhead. 
D) They are used to control costs. 
A) They are used to indicate where changes in technology and machinery need to be made. 
B) They are used to estimate the cost of inventory. 
C) They are used to plan direct materials, direct labor, and variable factory overhead. 
D) They are used to control costs.

Question 2

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows:   ​
-The following data are given for Bahia Company:   Overhead is applied on standard labor hours.The variable factory overhead controllable variance is

Accepted Answer

A) $65 unfavorable 
B) $65 favorable 
C) $540 unfavorable 
D) $540 favorable 
A) $65 unfavorable 
B) $65 favorable 
C) $540 unfavorable 
D) $540 favorable

Question 3

Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.

Accepted Answer

A) True 
 B)False

Question 4

Standards are set for only direct labor and direct materials.

Accepted Answer

A) True 
 B)False

Question 5

Ajay Company records standard costs and variances in its accounts. Journalize the entry to record the purchase of 6,000 widgets at $8.00 per unit, assuming widgets have a standard cost of $8.15 per unit.

Accepted Answer

The answer of Ajay Company records standard costs and variances...

Question 6

Favorable fixed factory overhead volume variances are never harmful, since achieving them encourages managers to run the factory above normal capacity.

Accepted Answer

A) True 
 B)False

Question 7

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual direct materials used are 800 units at $12, the direct materials price variance is $800 unfavorable.

Accepted Answer

A) True 
 B)False

Question 8

Match each of the following phrases with the term (a-e) it describes.
-Summarizes actual costs, standard costs, and the differences for units produced

Accepted Answer

A) Ideal standard 
B) Normal standard 
C) Budget performance report 
D) Unfavorable cost variance 
E) Favorable cost variance 
A) Ideal standard 
B) Normal standard 
C) Budget performance report 
D) Unfavorable cost variance 
E) Favorable cost variance

Question 9

Jaxson Corporation has the following data related to direct labor costs for September: actual costs for 10,200 hours at $15.75 per hour and standard costs for 10,800 hours at $15.50 per hour.​ The direct labor time variance is

Accepted Answer

A) $9,300 favorable 
B) $9,300 unfavorable 
C) $9,450 favorable 
D) $9,450 unfavorable 
A) $9,300 favorable 
B) $9,300 unfavorable 
C) $9,450 favorable 
D) $9,450 unfavorable

Question 10

Since the variable factory overhead controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable.

Accepted Answer

A) True 
 B)False

Question 11

Rosser Company records standard costs and variances in its accounts. Rosser Company produces a container that requires 4 yards of material per unit. The standard price of one yard of material is $4.50. During the month, 9,500 chairs were manufactured using 37,300 yards of material.​
Journalize the entry to record the direct materials used in production.

Accepted Answer

The answer of Rosser Company records standard costs and variances...

Question 12

The principle of exceptions allows managers to focus on correcting variances between

Accepted Answer

A) standard costs and actual costs 
B) variable costs and actual costs 
C) competitor's costs and actual costs 
D) competitor's costs and standard costs 
A) standard costs and actual costs 
B) variable costs and actual costs 
C) competitor's costs and actual costs 
D) competitor's costs and standard costs

Question 13

Lucy Corporation purchased and used 129,000 board feet of lumber in production at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard materials quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units.​
-The direct materials quantity variance is

Accepted Answer

A) $63,000 favorable 
B) $63,000 unfavorable 
C) $59,400 favorable 
D) $59,400 unfavorable 
A) $63,000 favorable 
B) $63,000 unfavorable 
C) $59,400 favorable 
D) $59,400 unfavorable

Question 14

​   
*Actual hours are equal to standard hours for units produced.​
-An unfavorable fixed overhead volume variance can be due to all of the following except

Accepted Answer

A) sales orders at a low level 
B) machine breakdowns 
C) employee inexperience 
D) an increase in utility costs 
A) sales orders at a low level 
B) machine breakdowns 
C) employee inexperience 
D) an increase in utility costs

Question 15

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows:   ​
-The following data are given for Bahia Company:   Overhead is applied on standard labor hours.The fixed factory overhead volume variance is

Accepted Answer

A) $65 unfavorable 
B) $65favorable 
C) $540 unfavorable 
D) $540 favorable 
A) $65 unfavorable 
B) $65favorable 
C) $540 unfavorable 
D) $540 favorable

Question 16

Match each of the following formulas and phrases with the term (a-e) it describes.
-(Actual Rate per Hour - Standard Rate per Hour) × Actual Hours

Accepted Answer

A) Direct materials price variance 
B) Direct labor rate variance 
C) Direct labor time variance 
D) Direct materials quantity variance 
E) Budgeted variable factory overhead 
A) Direct materials price variance 
B) Direct labor rate variance 
C) Direct labor time variance 
D) Direct materials quantity variance 
E) Budgeted variable factory overhead

Question 17

Variances from standard costs are usually not included in reports to stockholders.

Accepted Answer

A) True 
 B)False

Question 18

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows:   ​
-The fixed factory overhead volume variance is

Accepted Answer

A) $12,000 unfavorable 
B) $12,000 favorable 
C) $14,000 unfavorable 
D) $26,000 unfavorable 
A) $12,000 unfavorable 
B) $12,000 favorable 
C) $14,000 unfavorable 
D) $26,000 unfavorable

Question 19

Aquatic Corp.'s standard material requirement to produce one Model 2000 is 15 pounds of material at $110 per pound. Last month, Aquatic purchased 170,000 pounds of material at a total cost of $17,850,000. It used 162,000 pounds to produce 10,000 units of Model 2000.​
Determine the direct materials price variance and direct materials quantity variance, and indicate whether each variance is favorable or unfavorable.

Accepted Answer

Actual Cost = $17,850,000 ÷ 170,000 poun

Question 20

The following data relate to direct materials costs for February:
Materials cost per yard: standard, $2.00; actual, $2.10
Yards per unit: standard, 4.5 yards; actual, 4.75 yards
Units of production: 9,500
-The direct materials quantity variance is

Accepted Answer

A) $4,512.50 unfavorable 
B) $4,512.50 favorable 
C) $4,750.00 unfavorable 
D) $4,750.00 favorable 
A) $4,512.50 unfavorable 
B) $4,512.50 favorable 
C) $4,750.00 unfavorable 
D) $4,750.00 favorable

Exam 23: Evaluating Variances From Standard Costs

Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits for using standard costs?

Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.

Standards are set for only direct labor and direct materials.

Ajay Company records standard costs and variances in its accounts. Journalize the entry to record the purchase of 6,000 widgets at $8.00 per unit, assuming widgets have a standard cost of $8.15 per unit.

Favorable fixed factory overhead volume variances are never harmful, since achieving them encourages managers to run the factory above normal capacity.

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual direct materials used are 800 units at $12, the direct materials price variance is $800 unfavorable.

Match each of the following phrases with the term (a-e) it describes. -Summarizes actual costs, standard costs, and the differences for units produced

Jaxson Corporation has the following data related to direct labor costs for September: actual costs for 10,200 hours at $15.75 per hour and standard costs for 10,800 hours at $15.50 per hour.​ The direct labor time variance is

Since the variable factory overhead controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable.

The principle of exceptions allows managers to focus on correcting variances between

​ *Actual hours are equal to standard hours for units produced.​ -An unfavorable fixed overhead volume variance can be due to all of the following except

Match each of the following formulas and phrases with the term (a-e) it describes. -(Actual Rate per Hour - Standard Rate per Hour) × Actual Hours

Variances from standard costs are usually not included in reports to stockholders.

The following data relate to direct materials costs for February: Materials cost per yard: standard, $2.00; actual, $2.10 Yards per unit: standard, 4.5 yards; actual, 4.75 yards Units of production: 9,500 -The direct materials quantity variance is

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

The Accounting Cycle

Accounting for Retail Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current, Installment Notes, and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, Stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Activity-Based Costing

Support Department and Joint Cost Allocation

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

The Balanced Scorecard and Corporate Social Responsibility

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Jaxson Corporation has the following data related to direct labor costs for September: actual costs for 10,200 hours at $15.75 per hour and standard costs for 10,800 hours at $15.50 per hour. The direct labor time variance is

*Actual hours are equal to standard hours for units produced. -An unfavorable fixed overhead volume variance can be due to all of the following except