Question 1

Which of the following is true regarding variances?

Accepted Answer

A)  Unfavorable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage. 
B)  Favorable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage. 
C)  Unfavorable variances are always credits. 
D)  Favorable variances are always debits. 
E)  None of these. 
A)  Unfavorable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage. 
B)  Favorable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage. 
C)  Unfavorable variances are always credits. 
D)  Favorable variances are always debits. 
E)  None of these.

Question 2

The standard cost sheet provides the input standards needed to compute the total amount of inputs allowed for the actual output, an essential component in computing efficiency variances.

Accepted Answer

A) True 
 B)False

Question 3

Figure 10-7.
During April, a small roofing company purchased 700 bundles of a certain type of shingle at a price of $35 per bundle, $8 more than the standard price. Its standard quantity of this type of shingle is 725 bundles.
-Refer to Figure 10-7. What is the journal entry to record the issuance and usage of materials assuming that the roofing company purchased and used 700 bundles?

Accepted Answer

A)  Work in Process 18,900
Materials Usage Variance 675
Materials 19,575 
B)  Work in Process 19,575
Materials Usage Variance 675
Materials 18,900 
C)  Work in Process 24,500
Materials Usage Variance 875
Materials 25,375 
D)  Work in Process 25,375
Materials Usage Variance 875
Materials 24,500 
A)  Work in Process 18,900
Materials Usage Variance 675
Materials 19,575 
B)  Work in Process 19,575
Materials Usage Variance 675
Materials 18,900 
C)  Work in Process 24,500
Materials Usage Variance 875
Materials 25,375 
D)  Work in Process 25,375
Materials Usage Variance 875
Materials 24,500

Question 4

Rhodes Corporation manufactures a product with the following standard costs:
   Standards are based on normal monthly production involving 2,000 direct labor hours (500 units of output).
The following information pertains to July:
   Required:

Accepted Answer

The answer of Rhodes Corporation manufactures a product with the...

Question 5

Top Notch Music Inc. produces car stereos. During the year Top Notch Music produced 7,000 stereos. Materials and labor standards for producing these units are as follows:

Accepted Answer

The answer of Top Notch Music Inc. produces car stereos....

Question 6

The Cat's Meow manufactures gourmet cat food. During the month, it manufactured 5,000 cans of tuna, using 0.10 hour of direct labor per can at a rate of $8.00 per hour. The materials and labor standards for manufacturing the cans of tuna are as follows:
   The company actually used 4,900 pounds of tuna at a price of $0.65 per pound. It also purchased 5,000 cans at a price of $0.45 per can.

Accepted Answer

The answer of The Cat's Meow manufactures gourmet cat food....

Question 7

Grandma's Attic Company produces soft pillows made from goose down. The company uses a standard cost system and has set the following standards for materials and labor for each pillow:
   During the month, the company produced 1,000 goose down pillows. Actual geese purchased were 5,100, at $4 per goose. Actual fabric purchased was 2,900 yards at $2.10 per yard. There were no beginning or ending inventories of geese or fabric. Actual direct labor was 5,200 hours at $7.75 per hour.

Accepted Answer

The answer of Grandma's Attic Company produces soft pillows made...

Question 8

Kaizen costing involves

Accepted Answer

A)  changing the standards frequently. 
B)  changing management. 
C)  outsourcing processes. 
D)  major ad campaigns. 
A)  changing the standards frequently. 
B)  changing management. 
C)  outsourcing processes. 
D)  major ad campaigns.

Question 9

Figure 10-5.
  
-Refer to Figure 10-5. What is the materials price variance?

Accepted Answer

A)  $100,000 F 
B)  $112,500 U 
C)  $135,000 F 
D)  $170,000 U 
A)  $100,000 F 
B)  $112,500 U 
C)  $135,000 F 
D)  $170,000 U

Question 10

Kaizen costing provides fixed standards which reflect continuous improvement efforts.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true regarding the disposition of materials and labor variances?

Accepted Answer

A)  The variances for materials and labor are closed directly to Cost of Goods Sold regardless of materiality. 
B)  If the materials price variance is material, it is prorated among Materials Inventory, Materials Usage Variance, Work in Process, and Finished Goods. 
C)  The materials usage variance and the labor variances, if material, are prorated among Work in Process, Finished Goods, and Cost of Goods Sold. 
D)  The materials usage variance and the labor variances are always prorated among Work in Process, Finished Goods, and Cost of Goods Sold. 
E)  The materials usage variance and the labor variances are always closed to Cost of Goods Sold. 
A)  The variances for materials and labor are closed directly to Cost of Goods Sold regardless of materiality. 
B)  If the materials price variance is material, it is prorated among Materials Inventory, Materials Usage Variance, Work in Process, and Finished Goods. 
C)  The materials usage variance and the labor variances, if material, are prorated among Work in Process, Finished Goods, and Cost of Goods Sold. 
D)  The materials usage variance and the labor variances are always prorated among Work in Process, Finished Goods, and Cost of Goods Sold. 
E)  The materials usage variance and the labor variances are always closed to Cost of Goods Sold.

Question 12

Acme Brick Company uses the following rule to determine whether materials usage variances should be investigated:
A materials usage variance will be investigated when the variance is greater than either $5,000 or 10% of the standard cost.
During June, the company purchased and used 9,500 pounds of concrete for $5 per pound. It was able to make 20,000 bricks. Its standard quantity of materials allowed is 0.45 pound of concrete per brick at a standard price of $6 per pound.

Accepted Answer

The answer of Acme Brick Company uses the following rule...

Question 13

The standard unit cost is developed before the standard costs for direct materials, direct labor, and overhead can be set.

Accepted Answer

A) True 
 B)False

Question 14

Figure 10-9.
James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are:
   It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts.
-Refer to Figure 10-9. What is James' materials price variance assuming that materials purchased equals materials used?

Accepted Answer

A)  $750,000 F 
B)  $700,000 F 
C)  $700,000 U 
D)  $750,00 U 
A)  $750,000 F 
B)  $700,000 F 
C)  $700,000 U 
D)  $750,00 U

Question 15

Currently attainable standards offer the most behavioral benefits because higher performance levels are attained through challenging, yet achievable, standards.

Accepted Answer

A) True 
 B)False

Question 16

MATCHING
Match each item with the correct statement below.
a.
Quantity Standards
b.
Ideal Standards
c.
Price Standards
d.
Standard Cost Sheet
e.
Upper Control Limit
f.
Currently Attainable Standards
g.
Kaizen Standards
-Standards that are rigorous but achievable and reflect reasonable efficiency.

Accepted Answer

The answer of MATCHING
Match each item with the correct statement...

Question 17

The _______________ computes the difference between what was paid to direct laborers and what should have been paid.

Accepted Answer

The answer of The _______________ computes the difference between what...

Question 18

Which of the following is true regarding standard cost systems in manufacturing environments that emphasize continuous improvement and just-in-time manufacturing and purchasing?

Accepted Answer

A)  The standard cost system enhances the operational control. 
B)  The materials price variance may encourage the purchasing department to buy in smaller quantities to reduce inventories. 
C)  Variances can be computed and presented in reports to higher-level managers. 
D)  The operational level will benefit from the detailed computation of variances. 
E)  None of these. 
A)  The standard cost system enhances the operational control. 
B)  The materials price variance may encourage the purchasing department to buy in smaller quantities to reduce inventories. 
C)  Variances can be computed and presented in reports to higher-level managers. 
D)  The operational level will benefit from the detailed computation of variances. 
E)  None of these.

Question 19

Figure 10-5.
  
-Refer to Figure 10-5. What is Seaside's labor rate variance?

Accepted Answer

A)  $180,000 F 
B)  $180,000 U 
C)  $225,000 U 
D)  $217,500 F 
A)  $180,000 F 
B)  $180,000 U 
C)  $225,000 U 
D)  $217,500 F

Question 20

Standard hours allowed are computed using the equation

Accepted Answer

A)  unit labor standard * actual output. 
B)  unit labor standard * standard output. 
C)  unit labor standard * actual input. 
D)  unit labor standard *standard input. 
E)  not shown here. 
A)  unit labor standard * actual output. 
B)  unit labor standard * standard output. 
C)  unit labor standard * actual input. 
D)  unit labor standard *standard input. 
E)  not shown here.

Which of the following is true regarding variances?

The standard cost sheet provides the input standards needed to compute the total amount of inputs allowed for the actual output, an essential component in computing efficiency variances.

Rhodes Corporation manufactures a product with the following standard costs: Standards are based on normal monthly production involving 2,000 direct labor hours (500 units of output). The following information pertains to July: Required:

Top Notch Music Inc. produces car stereos. During the year Top Notch Music produced 7,000 stereos. Materials and labor standards for producing these units are as follows:

Kaizen costing involves

Figure 10-5. -Refer to Figure 10-5. What is the materials price variance?

Kaizen costing provides fixed standards which reflect continuous improvement efforts.

Which of the following is true regarding the disposition of materials and labor variances?

The standard unit cost is developed before the standard costs for direct materials, direct labor, and overhead can be set.

Currently attainable standards offer the most behavioral benefits because higher performance levels are attained through challenging, yet achievable, standards.

MATCHING Match each item with the correct statement below. a. Quantity Standards b. Ideal Standards c. Price Standards d. Standard Cost Sheet e. Upper Control Limit f. Currently Attainable Standards g. Kaizen Standards -Standards that are rigorous but achievable and reflect reasonable efficiency.

The _______________ computes the difference between what was paid to direct laborers and what should have been paid.

Which of the following is true regarding standard cost systems in manufacturing environments that emphasize continuous improvement and just-in-time manufacturing and purchasing?

Figure 10-5. -Refer to Figure 10-5. What is Seaside's labor rate variance?

Standard hours allowed are computed using the equation

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 10: Standard Costing: a Managerial Control Tool

Which of the following is true regarding variances?

The standard cost sheet provides the input standards needed to compute the total amount of inputs allowed for the actual output, an essential component in computing efficiency variances.

Rhodes Corporation manufactures a product with the following standard costs: Standards are based on normal monthly production involving 2,000 direct labor hours (500 units of output). The following information pertains to July: Required:

Top Notch Music Inc. produces car stereos. During the year Top Notch Music produced 7,000 stereos. Materials and labor standards for producing these units are as follows:

Kaizen costing involves

Figure 10-5. -Refer to Figure 10-5. What is the materials price variance?

Kaizen costing provides fixed standards which reflect continuous improvement efforts.

Which of the following is true regarding the disposition of materials and labor variances?

The standard unit cost is developed before the standard costs for direct materials, direct labor, and overhead can be set.

Currently attainable standards offer the most behavioral benefits because higher performance levels are attained through challenging, yet achievable, standards.

MATCHING Match each item with the correct statement below. a. Quantity Standards b. Ideal Standards c. Price Standards d. Standard Cost Sheet e. Upper Control Limit f. Currently Attainable Standards g. Kaizen Standards -Standards that are rigorous but achievable and reflect reasonable efficiency.

The _______________ computes the difference between what was paid to direct laborers and what should have been paid.

Which of the following is true regarding standard cost systems in manufacturing environments that emphasize continuous improvement and just-in-time manufacturing and purchasing?

Figure 10-5. -Refer to Figure 10-5. What is Seaside's labor rate variance?

Standard hours allowed are computed using the equation

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Profit Planning

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters