Question 1

Managers will want to use management by exception to determine which variances are significant enough to warrant investigation.

Accepted Answer

A) True 
 B)False

Question 2

Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows:   What is the price variance for steel used to manufacture the trains?

Accepted Answer

A) $625 favorable 
B) $103 favorable 
C) $625 unfavorable 
D) $103 unfavorable 
A) $625 favorable 
B) $103 favorable 
C) $625 unfavorable 
D) $103 unfavorable

Question 3

If production remains within the relevant range for the period, fixed costs are expected to remain fixed.

Accepted Answer

A) True 
 B)False

Question 4

Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows:   What is the direct materials flexible budget variance for steel used to manufacture the trains?

Accepted Answer

A) $419 unfavorable 
B) $419 favorable 
C) $831 unfavorable 
D) $831 favorable 
A) $419 unfavorable 
B) $419 favorable 
C) $831 unfavorable 
D) $831 favorable

Question 5

In order for cost benchmarks to be effective, standard costs must be

Accepted Answer

A) based on historical costs. 
B) updated regularly. 
C) reviewed by salaried assembly-line workers. 
D) practical and attainable. 
A) based on historical costs. 
B) updated regularly. 
C) reviewed by salaried assembly-line workers. 
D) practical and attainable.

Question 6

A company's purchasing department negotiates all of the purchasing contracts for raw materials. Which variance is most useful in assessing the performance of the purchasing department?

Accepted Answer

A) Materials quantity variance 
B) Materials price variance 
C) Labor rate variance 
D) Labor efficiency variance 
A) Materials quantity variance 
B) Materials price variance 
C) Labor rate variance 
D) Labor efficiency variance

Question 7

The type of standard that provides allowances for normal waste and inefficiency in the production process is referred to as a(n)

Accepted Answer

A) ideal standard. 
B) perfection standard. 
C) realistic standard. 
D) practical standard. 
A) ideal standard. 
B) perfection standard. 
C) realistic standard. 
D) practical standard.

Question 8

The Perry Corporation recorded the following budgeted and actual information relating to fixed overhead costs for its Z-Line of products:   What is Perry's fixed manufacturing overhead volume variance?

Accepted Answer

A) $756.25 unfavorable 
B) $168.75 unfavorable 
C) $756.25 favorable 
D) $168.75 favorable 
A) $756.25 unfavorable 
B) $168.75 unfavorable 
C) $756.25 favorable 
D) $168.75 favorable

Question 9

Dozen Bakery makes cupcakes and cookies. Dozen gathered the following information for the current year regarding its use of flour and butter (flour is a direct material for cupcakes and butter is a direct material for cookies):   The actual direct material quantity used per batch for Cupcakes would be closest to

Accepted Answer

A) 2.9 lb. 
B) 1.7 lbs. 
C) 2.0 lbs. 
D) 0.4 lbs. 
A) 2.9 lb. 
B) 1.7 lbs. 
C) 2.0 lbs. 
D) 0.4 lbs.

Question 10

Chemical Supply Incorporated budgeted two and one half hours of direct labor per unit at $11.75 per hour to produce 650 units of product. The 650 units were completed using 1,750 hours of direct labor at $12.50 per hour. What is the direct labor rate variance?

Accepted Answer

A) $1,219 favorable 
B) $1,313 favorable 
C) $1,219 unfavorable 
D) $1,313 unfavorable 
A) $1,219 favorable 
B) $1,313 favorable 
C) $1,219 unfavorable 
D) $1,313 unfavorable

Question 11

Channel One Industries uses a standard costing system to apply manufacturing costs to its production process. In May, Channel One anticipated producing 2,450 units with fixed manufacturing overhead costs allocated at $7.40 per direct labor hour with a standard of 1.5 direct labor hours per unit. In May, actual production was 3,200 units and actual fixed manufacturing overhead costs were $23,000. What was Channel One's fixed manufacturing overhead volume variance for May?

Accepted Answer

A) $4,195 favorable 
B) $4,195 unfavorable 
C) $8,325 favorable 
D) $8,325 unfavorable 
A) $4,195 favorable 
B) $4,195 unfavorable 
C) $8,325 favorable 
D) $8,325 unfavorable

Question 12

The ________ "shows how well management has controlled overhead costs."

Accepted Answer

A) overhead flexible budget variance 
B) production volume variance 
C) quantity variance 
D) price variance 
A) overhead flexible budget variance 
B) production volume variance 
C) quantity variance 
D) price variance

Question 13

Work in process inventory is debited for which of the following when recording the use of direct materials in the production process?

Accepted Answer

A) Standard quantity of direct materials used for actual production output times actual cost per pound 
B) Standard quantity of direct materials used for actual production output times standard cost per pound 
C) Actual quantity of direct materials used times standard cost per pound 
D) Actual quantity of direct materials used times actual cost per pound 
A) Standard quantity of direct materials used for actual production output times actual cost per pound 
B) Standard quantity of direct materials used for actual production output times standard cost per pound 
C) Actual quantity of direct materials used times standard cost per pound 
D) Actual quantity of direct materials used times actual cost per pound

Question 14

Price variances for direct materials shows how much of the total variance is due to paying higher or lower prices than expected for the direct materials purchased.

Accepted Answer

A) True 
 B)False

Question 15

The Armstrong Corporation developed a flexible budget for its production process. Armstrong budgeted to use 16,000 pounds of direct material with a standard cost of $18 per pound to produce 12,000 units of finished product. Armstrong actually purchased 18,000 pounds and used 17,000 pounds of direct material with a cost of $21 per pound to produce 12,000 units of finished product. Given these results, what is Armstrong's direct material quantity variance?

Accepted Answer

A) $36,000 favorable 
B) $18,000 favorable 
C) $36,000 unfavorable 
D) $18,000 unfavorable 
A) $36,000 favorable 
B) $18,000 favorable 
C) $36,000 unfavorable 
D) $18,000 unfavorable

Question 16

Crown Industries has the following information about its standards and production activity for December: Actual manufacturing overhead cost incurred, $92,500
Variable manufacturing overhead cost @ $3.25 per unit produced
Fixed manufacturing overhead cost @ $1.50 per unit produced
($22,500/15,000 budgeted units)
Actual units produced, 5,400
Assume the allocation base for fixed overhead costs is the number of units to be produced.
How much are the standard overhead costs allocated to actual production?

Accepted Answer

A) $48,750 
B) $92,500 
C) $71,250 
D) $25,650 
A) $48,750 
B) $92,500 
C) $71,250 
D) $25,650

Question 17

An LCD screen is purchased to be used in the manufacturing of a digital watch. The standard price for the LCD screen used is $40.00. During the month of February, 3,400 screens were purchased and used. The materials price variance was $6,000 unfavorable. The standard number of screens allowed for the actual number of watches manufactured during the period was 25,000 screens. The actual purchase price of each LCD screen would be closest to

Accepted Answer

A) $39.76 per LCD screen. 
B) $40.24 per LCD screen. 
C) $38.24 per LCD screen. 
D) $41.76 per LCD screen. 
A) $39.76 per LCD screen. 
B) $40.24 per LCD screen. 
C) $38.24 per LCD screen. 
D) $41.76 per LCD screen.

Question 18

It is possible to have a situation where the direct materials price variance is favorable and the direct materials quantity variance is unfavorable.

Accepted Answer

A) True 
 B)False

Question 19

MacBeth Fabrics budgeted to manufacture 1,400 curtains in February. Actual output for March was 1,575 curtains with total direct materials cost of $3,400 and total direct labor cost of $5,250. The direct labor standard is 20 minutes per curtain at a direct labor rate of 17.50 per hour. The direct material standard is 0.75 yards of direct materials per curtain at a cost of $13 per pound. Actual direct labor hours were 275. A variance analysis for February would show a direct labor rate variance of

Accepted Answer

A) $2,506 favorable. 
B) $2,506 unfavorable. 
C) $438 favorable. 
D) $438 unfavorable. 
A) $2,506 favorable. 
B) $2,506 unfavorable. 
C) $438 favorable. 
D) $438 unfavorable.

Question 20

A standard cost for production inputs is a carefully predetermined cost that usually is expressed on a per-unit basis.

Accepted Answer

A) True 
 B)False

Managers will want to use management by exception to determine which variances are significant enough to warrant investigation.

Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows: What is the price variance for steel used to manufacture the trains?

If production remains within the relevant range for the period, fixed costs are expected to remain fixed.

In order for cost benchmarks to be effective, standard costs must be

A company's purchasing department negotiates all of the purchasing contracts for raw materials. Which variance is most useful in assessing the performance of the purchasing department?

The type of standard that provides allowances for normal waste and inefficiency in the production process is referred to as a(n)

The Perry Corporation recorded the following budgeted and actual information relating to fixed overhead costs for its Z-Line of products: What is Perry's fixed manufacturing overhead volume variance?

Chemical Supply Incorporated budgeted two and one half hours of direct labor per unit at $11.75 per hour to produce 650 units of product. The 650 units were completed using 1,750 hours of direct labor at $12.50 per hour. What is the direct labor rate variance?

The ________ "shows how well management has controlled overhead costs."

Work in process inventory is debited for which of the following when recording the use of direct materials in the production process?

Price variances for direct materials shows how much of the total variance is due to paying higher or lower prices than expected for the direct materials purchased.

It is possible to have a situation where the direct materials price variance is favorable and the direct materials quantity variance is unfavorable.

A standard cost for production inputs is a carefully predetermined cost that usually is expressed on a per-unit basis.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

Exam 11: Standard Costs and Variances

Managers will want to use management by exception to determine which variances are significant enough to warrant investigation.

If production remains within the relevant range for the period, fixed costs are expected to remain fixed.

In order for cost benchmarks to be effective, standard costs must be

A company's purchasing department negotiates all of the purchasing contracts for raw materials. Which variance is most useful in assessing the performance of the purchasing department?

The type of standard that provides allowances for normal waste and inefficiency in the production process is referred to as a(n)

The Perry Corporation recorded the following budgeted and actual information relating to fixed overhead costs for its Z-Line of products: What is Perry's fixed manufacturing overhead volume variance?

Chemical Supply Incorporated budgeted two and one half hours of direct labor per unit at $11.75 per hour to produce 650 units of product. The 650 units were completed using 1,750 hours of direct labor at $12.50 per hour. What is the direct labor rate variance?

The ________ "shows how well management has controlled overhead costs."

Work in process inventory is debited for which of the following when recording the use of direct materials in the production process?

Price variances for direct materials shows how much of the total variance is due to paying higher or lower prices than expected for the direct materials purchased.

It is possible to have a situation where the direct materials price variance is favorable and the direct materials quantity variance is unfavorable.

A standard cost for production inputs is a carefully predetermined cost that usually is expressed on a per-unit basis.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters