Question 1

The term "standard hours allowed" measures

Accepted Answer

A) budgeted output at actual hours. 
B) budgeted output at standard hours. 
C) actual output at standard hours. 
D) actual output at actual hours. 
A) budgeted output at actual hours. 
B) budgeted output at standard hours. 
C) actual output at standard hours. 
D) actual output at actual hours.

Question 2

Expected standards are a valuable tool for motivation and control.

Accepted Answer

A) True 
 B)False

Question 3

Favorable variances are represented by credit balances in the overhead account.

Accepted Answer

A) True 
 B)False

Question 4

The price variance reflects the difference between the price paid for inputs and the standard price for those inputs.

Accepted Answer

A) True 
 B)False

Question 5

Favorable variances are represented by debit balances in the overhead account.

Accepted Answer

A) True 
 B)False

Question 6

The difference between actual and budgeted fixed factory overhead is referred to as a __________________________________________________.

Accepted Answer

fixed over

Question 7

The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the _______________________________________________________.

Accepted Answer

variable o

Question 8

Discuss how establishing standards benefits the following management functions: performance evaluation and decision making.

Accepted Answer

Performance evaluation is enhanced by th

Question 9

As production becomes more automated,direct labor may be viewed more as a conversion cost than as a prime cost.

Accepted Answer

A) True 
 B)False

Question 10

Fixed overhead costs are

Accepted Answer

A) best controlled on a unit-by-unit basis of products produced. 
B) mostly incurred to provide the capacity to produce and are best controlled on a total basis at the time they are originally negotiated. 
C) constant on a per-unit basis at all different activity levels within the relevant range. 
D) best controlled as to spending during the production process. 
A) best controlled on a unit-by-unit basis of products produced. 
B) mostly incurred to provide the capacity to produce and are best controlled on a total basis at the time they are originally negotiated. 
C) constant on a per-unit basis at all different activity levels within the relevant range. 
D) best controlled as to spending during the production process.

Question 11

Pearce Company
Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July:
             Standard:                      DLH per unit      2.20               Variable overhead per DLH         $2.50               Fixed overhead per DLH                      Budgeted variable overhead      $3.00              (based on 11,990 DLHs)                          Actual:                 Units produced       4,400               Direct labor hours        8,800               Variable overhead      $29,950               Fixed overhead      $42,300      
Refer to Pearce Company Using the three-variance approach,what is the spending variance?

Accepted Answer

A) $23,850 U 
B) $23,850 F 
C) $14,280 F 
D) $14,280 U 
A) $23,850 U 
B) $23,850 F 
C) $14,280 F 
D) $14,280 U

Question 12

Lincoln Company
Lincoln Company applies overhead based on direct labor hours and has the following available for the current month:
 Standard:
Direct labor hous per unit                                                  6
Variable overhead per DLH                                           $ \$ .80 $
Fixed overhead per DLH
$\text { (based on 11,900 DLHs) }$                                     $ \$ 2.10 $

Actual:
Units prochuced                                                              2,000
Direct labor hours                                                           11,900
Variable overhead                                                         $9,900
Fixed overheacl                                                            $25,500
Refer to Lincoln Company.Compute all the appropriate variances using the three-variance approach.

Accepted Answer

Refer to Lincoln Com

Question 13

A large labor efficiency variance is prorated to which of the following at year-end?
                                                  WIP               $ F G $
Cost of Goods Sold                $\text {\underline{  Inventory} }$     $\text {\underline{  Inventory} }$

Accepted Answer

A) no no no 
B) no yes yes 
C) yes no no 
D) yes yes yes 
A) no no no 
B) no yes yes 
C) yes no no 
D) yes yes yes

Question 14

Buckingham Company
Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units:
             Standard:                      DLH per unit        2.50               Variable overhead per DLH         $1.75               Fixed overhead per DLH       $3.10               Budgeted variable overhead       $21,875               Budgeted fixed overhead       $38,750                   Actual:                      Direct labor hours         10,000               Variable overhead       $26,250               Fixed overhead       $38,000      
Refer to Buckingham Company.Using the four-variance approach,what is the variable overhead spending variance?

Accepted Answer

A) $4,375 U 
B) $4,375 F 
C) $8,750 U 
D) $6,562 U 
A) $4,375 U 
B) $4,375 F 
C) $8,750 U 
D) $6,562 U

Question 15

One unit requires 2 direct labor hours to produce.Standard variable overhead per unit is $1.25 and standard fixed overhead per unit is $1.75.If 330 units were produced this month,what total amount of overhead is applied to the units produced?

Accepted Answer

A) $990 
B) $1,980 
C) $660 
D) cannot be determined without knowing the actual hours worked 
A) $990 
B) $1,980 
C) $660 
D) cannot be determined without knowing the actual hours worked

Question 16

An unfavorable fixed overhead volume variance is most often caused by

Accepted Answer

A) actual fixed overhead incurred exceeding budgeted fixed overhead. 
B) an over-application of fixed overhead to production. 
C) an increase in the level of the finished inventory. 
D) normal capacity exceeding actual production levels. 
A) actual fixed overhead incurred exceeding budgeted fixed overhead. 
B) an over-application of fixed overhead to production. 
C) an increase in the level of the finished inventory. 
D) normal capacity exceeding actual production levels.

Question 17

Garfield Company
Garfield Company applies overhead based on direct labor hours and has the following available for the current month:
 Standard:
Direct labor hous per unit                                                  5
Variable overhead per DLH                                           $ \$ 7.5 $
Fixed overhead per DLH
$\text { (based on 8,900 DLHs) }$                                     $ \$ 1.90 $

Actual:
Units prochuced                                                              1,800
Direct labor hours                                                           8,900
Variable overhead                                                         $6,400
Fixed overheacl                                                            $17,500
Refer to Garfield Company.Compute all the appropriate variances using the four-variance approach.

Accepted Answer

Refer to Garfield Co

Question 18

Brennan Company
The following information is for Brennan Company's September production:
$\begin{array}{l}
\text { Standards: }\
\begin{array}{ll}
\text { Material } & 4.0 \text { feet per unit@ } \$ 4.20 \text { per foot } \
\text { Labor } &3.0 \text { hours per unit@ } \$ 7.50 \text { per hour }
\end{array}
\end{array}$

$\begin{array}{l}
\text { Actual: }\
\begin{array}{ll}
\text { Production } & 3,500 \text { units produced during the month } \
\text { Material } & 14,200 \text { feet used; } 14,700 \text { feet purchased @ } \$ 3.70 \text { per foo } \
\text { Labor } & 10,400 \text { direct labor hours@ } \$ 8.35 \text { per hour }
\end{array}
\end{array}$

(Round all answers to the nearest dollar. )
Refer to Brennan Company.What is the labor efficiency variance?

Accepted Answer

A) $825 F 
B) $825 U 
C) $835 F 
D) $835 U 
A) $825 F 
B) $825 U 
C) $835 F 
D) $835 U

Question 19

A total variance is best defined as the difference between total

Accepted Answer

A) actual cost and total cost applied for the standard output of the period. 
B) standard cost and total cost applied to production. 
C) actual cost and total standard cost of the actual input of the period. 
D) actual cost and total cost applied for the actual output of the perioD. 
A) actual cost and total cost applied for the standard output of the period. 
B) standard cost and total cost applied to production. 
C) actual cost and total standard cost of the actual input of the period. 
D) actual cost and total cost applied for the actual output of the perioD.

Question 20

The point of purchase model calculates the materials price variance using the quantity of materials used in production.

Accepted Answer

A) True 
 B)False

The term "standard hours allowed" measures

Expected standards are a valuable tool for motivation and control.

Favorable variances are represented by credit balances in the overhead account.

The price variance reflects the difference between the price paid for inputs and the standard price for those inputs.

Favorable variances are represented by debit balances in the overhead account.

The difference between actual and budgeted fixed factory overhead is referred to as a __________________________________________________.

The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the _______________________________________________________.

Discuss how establishing standards benefits the following management functions: performance evaluation and decision making.

As production becomes more automated,direct labor may be viewed more as a conversion cost than as a prime cost.

Fixed overhead costs are

A large labor efficiency variance is prorated to which of the following at year-end? WIP $F G$ Cost of Goods Sold $\text {\underline{ Inventory} }$ $\text {\underline{ Inventory} }$

One unit requires 2 direct labor hours to produce.Standard variable overhead per unit is $1.25 and standard fixed overhead per unit is $1.75.If 330 units were produced this month,what total amount of overhead is applied to the units produced?

An unfavorable fixed overhead volume variance is most often caused by

A total variance is best defined as the difference between total

The point of purchase model calculates the materials price variance using the quantity of materials used in production.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Standard:
DLH per unit	2.20
Variable overhead per DLH	$2.50
Fixed overhead per DLH
Budgeted variable overhead	$3.00
(based on 11,990 DLHs)

Actual:
Units produced	4,400
Direct labor hours	8,800
Variable overhead	$29,950
Fixed overhead	$42,300

Standard:
DLH per unit	2.50
Variable overhead per DLH	$1.75
Fixed overhead per DLH	$3.10
Budgeted variable overhead	$21,875
Budgeted fixed overhead	$38,750

Actual:
Direct labor hours	10,000
Variable overhead	$26,250
Fixed overhead	$38,000

Exam 7: Standard Costing and Variance Analysis

The term "standard hours allowed" measures

Expected standards are a valuable tool for motivation and control.

Favorable variances are represented by credit balances in the overhead account.

The price variance reflects the difference between the price paid for inputs and the standard price for those inputs.

Favorable variances are represented by debit balances in the overhead account.

The difference between actual and budgeted fixed factory overhead is referred to as a __________________________________________________.

The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the _______________________________________________________.

Discuss how establishing standards benefits the following management functions: performance evaluation and decision making.

As production becomes more automated,direct labor may be viewed more as a conversion cost than as a prime cost.

Fixed overhead costs are

A large labor efficiency variance is prorated to which of the following at year-end? WIP FG F G FG Cost of Goods Sold Inventory‾ \text {\underline{ Inventory} } Inventory​ Inventory‾ \text {\underline{ Inventory} } Inventory​

One unit requires 2 direct labor hours to produce.Standard variable overhead per unit is $1.25 and standard fixed overhead per unit is $1.75.If 330 units were produced this month,what total amount of overhead is applied to the units produced?

An unfavorable fixed overhead volume variance is most often caused by

A total variance is best defined as the difference between total

The point of purchase model calculates the materials price variance using the quantity of materials used in production.

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

A large labor efficiency variance is prorated to which of the following at year-end? WIP $F G$ Cost of Goods Sold $\text {\underline{ Inventory} }$ $\text {\underline{ Inventory} }$