Question 1

Sometimes a firm may allocate a portion of period-end variances to the Work in Process Inventory account.

Accepted Answer

A) True 
 B)False

Question 2

Planning to purchase materials in bulk amounts will affect the standard price for direct materials.

Accepted Answer

A) True 
 B)False

Question 3

How would a manager interpret a positive direct labor efficiency variance?

Accepted Answer

"If the actual number of hours worked ex

Question 4

When are variances normally closed to Cost of Goods Sold?

Accepted Answer

A)  At the end of each month 
B)  As products are sold 
C)  When the variance occurs 
D)  During year-end closing 
E)  None of the above 
A)  At the end of each month 
B)  As products are sold 
C)  When the variance occurs 
D)  During year-end closing 
E)  None of the above

Question 5

When should standard costs be modified?

Accepted Answer

"Standard costs are usually es

Question 6

Urban Transit Authority (UTA) runs a mass transit system in a large metropolitan area. UTA applies the costs of its services to each bus route. The variable overhead application rate is $6/hour. The standard route takes 2 hours to complete. This year, the company ran 48,000 routes, averaged 2.10 hours per route, and incurred $598,000 in variable overhead costs. 
What is the entry to record variable overhead applied throughout the period?

Accepted Answer

Actual variable overhead cost (AC): $598

Question 7

The direct materials price variance is found by the following equation: Actual Quantity Used in Production × (Actual Price - Standard Price)

Accepted Answer

A) True 
 B)False

Question 8

The calculations for variable overhead variances are significantly different from those for direct labor variances.

Accepted Answer

A) True 
 B)False

Question 9

Use the following information to answer Questions below .
The following data relates to Koontz Corporation's operations for the month. 1,000 finished units of product were produced and the normal monthly capacity is 2,200 direct labor hours.
  
-What is the variable overhead efficiency variance?

Accepted Answer

A)  $1,200 F 
B)  $1,200 U 
C)  $1,600 F 
D)  $1,600 U 
E)  None of the above 
A)  $1,200 F 
B)  $1,200 U 
C)  $1,600 F 
D)  $1,600 U 
E)  None of the above

Question 10

The following information is provided for Dexter Corporation:
   What is the variable overhead flexible budget variance?

Accepted Answer

Actual variable overhead costs incurred:

Question 11

Mineral Extraction Inc. is a mining company in Texas. Management is preparing the budgets for the upcoming year and is calculating the standard labor cost per load of ore. If a machine used in the mining process were running at 100% capacity, it could extract 3 loads per day at a rate of 3.5 machine hours/load. However, the labor union contract indicates that machine operators cannot be required to work more than eight hours per day and the company currently operates one shift per day. Each day, the equipment must be set up and taken down, requiring the help of all machine operators. The set-up and take-down process for the equipment requires a half hour in the morning and a half hour at the end of the day. Assume that the set-up and take-down time is incorporated into the overall time workers can be on the job each day and that set up / take down time is incorporated into the standard labor cost per load. Four workers are required to operate the machinery at a given time. The standard wage rate is $22 per direct labor hour. 
What is the standard direct labor cost per load of ore?

Accepted Answer

Standard hours per load:
8 hours per day

Question 12

How do damaged goods affect the direct materials efficiency variance?

Accepted Answer

The materials damaged are included in th

Question 13

Why are fixed costs separated from variable costs in standard costing?

Accepted Answer

"This is necessary because fix

Question 14

When direct materials are requisitioned into production, a price variance may need to be recorded.

Accepted Answer

A) True 
 B)False

Question 15

Standard costing can be used to apply costs for which of the following?

Accepted Answer

A)  Direct Materials 
B)  Direct Labor 
C)  Indirect Materials and Indirect Labor 
D)  Factory Utilities 
E)  All of the above can be applied using standard costing 
A)  Direct Materials 
B)  Direct Labor 
C)  Indirect Materials and Indirect Labor 
D)  Factory Utilities 
E)  All of the above can be applied using standard costing

Question 16

Reasons for using standard costing include:

Accepted Answer

A)  Comparing projected costs against actual costs 
B)  Planning and budgeting purposes 
C)  Setting prices in advance 
D)  Identifying specific areas for process improvement 
E)  All of the above 
A)  Comparing projected costs against actual costs 
B)  Planning and budgeting purposes 
C)  Setting prices in advance 
D)  Identifying specific areas for process improvement 
E)  All of the above

Question 17

Is it possible to have a favorable direct materials flexible budget variance when there is an unfavorable direct materials efficiency variance? Explain your answer.

Accepted Answer

Yes, if there is a favorable d

Question 18

If the actual wage rate equals the budgeted rate, why would there be a direct labor flexible budget variance?

Accepted Answer

"We may not use our

Question 19

Even when a variance occurs, inventory is carried on the books (in both Work in Process Inventory and Finished Goods Inventory) at standard cost.

Accepted Answer

A) True 
 B)False

Question 20

The following information is provided for Jibson, Inc.:
   What is the direct labor efficiency variance?

Accepted Answer

Direct Labor Efficiency Variance = SR ×

Sometimes a firm may allocate a portion of period-end variances to the Work in Process Inventory account.

Planning to purchase materials in bulk amounts will affect the standard price for direct materials.

How would a manager interpret a positive direct labor efficiency variance?

When are variances normally closed to Cost of Goods Sold?

When should standard costs be modified?

The direct materials price variance is found by the following equation: Actual Quantity Used in Production × (Actual Price - Standard Price)

The calculations for variable overhead variances are significantly different from those for direct labor variances.

Use the following information to answer Questions below . The following data relates to Koontz Corporation's operations for the month. 1,000 finished units of product were produced and the normal monthly capacity is 2,200 direct labor hours. -What is the variable overhead efficiency variance?

The following information is provided for Dexter Corporation: What is the variable overhead flexible budget variance?

How do damaged goods affect the direct materials efficiency variance?

Why are fixed costs separated from variable costs in standard costing?

When direct materials are requisitioned into production, a price variance may need to be recorded.

Standard costing can be used to apply costs for which of the following?

Reasons for using standard costing include:

Is it possible to have a favorable direct materials flexible budget variance when there is an unfavorable direct materials efficiency variance? Explain your answer.

If the actual wage rate equals the budgeted rate, why would there be a direct labor flexible budget variance?

Even when a variance occurs, inventory is carried on the books (in both Work in Process Inventory and Finished Goods Inventory) at standard cost.

The following information is provided for Jibson, Inc.: What is the direct labor efficiency variance?

Overview of Managerial Accounting

Managerial Accounting Concepts and Cost Flows

Cost Accounting Systems: Job Order Costing

Cost Accounting Systems: Process Costing

Activity-Based Costing

Cost-Volume-Profit Relationships

Variable Costing: A Tool for Decision Making

Relevant Costs and Short-Term Decision Making

Planning and Budgeting

Flexible Budgets, Segment Analysis, and Performance Reporting

Capital Budgeting

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Appendix: Accounting and the Time Value of Money

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Exam 10: Standard Costing and Variance Analysis

Sometimes a firm may allocate a portion of period-end variances to the Work in Process Inventory account.

Planning to purchase materials in bulk amounts will affect the standard price for direct materials.

How would a manager interpret a positive direct labor efficiency variance?

When are variances normally closed to Cost of Goods Sold?

When should standard costs be modified?

The direct materials price variance is found by the following equation: Actual Quantity Used in Production × (Actual Price - Standard Price)

The calculations for variable overhead variances are significantly different from those for direct labor variances.

Use the following information to answer Questions below . The following data relates to Koontz Corporation's operations for the month. 1,000 finished units of product were produced and the normal monthly capacity is 2,200 direct labor hours. -What is the variable overhead efficiency variance?

The following information is provided for Dexter Corporation: What is the variable overhead flexible budget variance?

How do damaged goods affect the direct materials efficiency variance?

Why are fixed costs separated from variable costs in standard costing?

When direct materials are requisitioned into production, a price variance may need to be recorded.

Standard costing can be used to apply costs for which of the following?

Reasons for using standard costing include:

Is it possible to have a favorable direct materials flexible budget variance when there is an unfavorable direct materials efficiency variance? Explain your answer.

If the actual wage rate equals the budgeted rate, why would there be a direct labor flexible budget variance?

Even when a variance occurs, inventory is carried on the books (in both Work in Process Inventory and Finished Goods Inventory) at standard cost.

The following information is provided for Jibson, Inc.: What is the direct labor efficiency variance?

Overview of Managerial Accounting

Managerial Accounting Concepts and Cost Flows

Cost Accounting Systems: Job Order Costing

Cost Accounting Systems: Process Costing

Activity-Based Costing

Cost-Volume-Profit Relationships

Variable Costing: A Tool for Decision Making

Relevant Costs and Short-Term Decision Making

Planning and Budgeting

Flexible Budgets, Segment Analysis, and Performance Reporting

Capital Budgeting

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Appendix: Accounting and the Time Value of Money

Filters