Question 1

Standard cost typically refers to costs per unit for direct materials,direct labor,and variable overhead.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is true about "management by exception"?

Accepted Answer

A) It requires managers to investigate all favorable and unfavorable variances. 
B) It requires the use of variance analysis. 
C) It rarely requires the use of variance analysis. 
D) It requires managers to calculate standard costs,but ignore actual costs. 
E) None of the answer choices is correct. 
A) It requires managers to investigate all favorable and unfavorable variances. 
B) It requires the use of variance analysis. 
C) It rarely requires the use of variance analysis. 
D) It requires managers to calculate standard costs,but ignore actual costs. 
E) None of the answer choices is correct.

Question 3

Prado Company applies fixed manufacturing overhead costs to products based on direct labor hours.Information for the month of April appears below.Prado's expected to produce and sell 500 units for the month.
   
Calculate the fixed overhead spending variance and production volume variance.Clearly label each variance as favorable or unfavorable.

Accepted Answer

@#IMG-DLM& 
* Standard hours of 10,400 = 520 actua

Question 4

Management by exception is a term used to describe managers who look at all variances,regardless of the amount.

Accepted Answer

A) True 
 B)False

Question 5

A higher mix of skilled indirect labor workers typically results in an unfavorable variable overhead spending variance.

Accepted Answer

A) True 
 B)False

Question 6

Exhibit 10-2
Benny's Bakery produces bagels for resale at local grocery stores.The master budget indicates that the company expects to use 2.5 pounds of direct materials for each unit produced at a cost of $10.00 per pound (one unit = one batch of bagels).Each unit produced will require 0.30 direct labor hours at a cost of $24.00 per hour.Variable manufacturing overhead is applied based on direct labor hours at a rate of $4.80 per hour.Last year's sales were expected to total 40,000 units.Benny just received last year's actual results showing sales of 35,000 units.
-Refer to Exhibit 10-2.What amount would the flexible budget show for direct labor?

Accepted Answer

A) $840,000 
B) $252,000 
C) $288,000 
D) $280,000 
E) None of the answer choices is correct. 
A) $840,000 
B) $252,000 
C) $288,000 
D) $280,000 
E) None of the answer choices is correct.

Question 7

If a company has a favorable materials quantity variance of $3,300,the journal entry to record the use of direct materials in production along with this related quantity variance would include:

Accepted Answer

A) a credit to Materials Quantity Variance. 
B) a credit to Materials Price Variance. 
C) a debit to Materials Quantity Variance. 
D) a debit to Materials Price Variance. 
E) None of the answer choices is correct. 
A) a credit to Materials Quantity Variance. 
B) a credit to Materials Price Variance. 
C) a debit to Materials Quantity Variance. 
D) a debit to Materials Price Variance. 
E) None of the answer choices is correct.

Question 8

If an analysis shows an unfavorable labor rate variance of $18,000 and a favorable labor efficiency variance of $10,000,the entry to record the cost of direct labor and related variances would include:

Accepted Answer

A) a debit to Labor Rate Variance for $18,000. 
B) a credit to Work in Process inventory for $18,000. 
C) a debit to Labor Efficiency Variance for $10,000. 
D) a debit to Cost of Goods Sold for $10,000. 
E) None of the answer choices is correct. 
A) a debit to Labor Rate Variance for $18,000. 
B) a credit to Work in Process inventory for $18,000. 
C) a debit to Labor Efficiency Variance for $10,000. 
D) a debit to Cost of Goods Sold for $10,000. 
E) None of the answer choices is correct.

Question 9

Most managers prefer attainable standards rather than ideal standards for the following reasons except:

Accepted Answer

A) attainable standards reflect what really happens in the factory. 
B) attainable standards allow for occasional downtime for equipment. 
C) attainable standards motivate employees to achieve perfection. 
D) attainable standards recognize that some materials might have to be scrapped. 
E) None of the answer choices is correct. 
A) attainable standards reflect what really happens in the factory. 
B) attainable standards allow for occasional downtime for equipment. 
C) attainable standards motivate employees to achieve perfection. 
D) attainable standards recognize that some materials might have to be scrapped. 
E) None of the answer choices is correct.

Question 10

When ideal standards are used,which of the following is most likely true?

Accepted Answer

A) The standards are not likely to be achieved. 
B) The standards allow for occasional downtime for equipment. 
C) The standards reflect what really happens in the factory. 
D) The standards motivate employees to achieve perfection. 
E) None of the answer choices is correct. 
A) The standards are not likely to be achieved. 
B) The standards allow for occasional downtime for equipment. 
C) The standards reflect what really happens in the factory. 
D) The standards motivate employees to achieve perfection. 
E) None of the answer choices is correct.

Question 11

Regardless of whether a company uses the traditional costing approach or an activity-based costing approach,the process of performing variance analysis is similar.

Accepted Answer

A) True 
 B)False

Question 12

The labor rate variance is defined as the difference between actual costs for direct labor and budgeted costs based on the standards.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following would most likely be the reason for an unfavorable labor efficiency variance?

Accepted Answer

A) A higher mix of skilled workers made more efficient use of the labor hours. 
B) The company used lower skilled workers than they anticipated to complete products. 
C) High-quality materials resulted in less time spent working with materials waste. 
D) An employee training program improved the efficient use of time. 
E) None of the answer choices is correct. 
A) A higher mix of skilled workers made more efficient use of the labor hours. 
B) The company used lower skilled workers than they anticipated to complete products. 
C) High-quality materials resulted in less time spent working with materials waste. 
D) An employee training program improved the efficient use of time. 
E) None of the answer choices is correct.

Question 14

Which of the following remains the same when comparing a flexible budget to a master budget?

Accepted Answer

A) Total sales. 
B) Net income. 
C) Total variable costs. 
D) Total fixed costs. 
E) None of the answer choices is correct. 
A) Total sales. 
B) Net income. 
C) Total variable costs. 
D) Total fixed costs. 
E) None of the answer choices is correct.

Question 15

Companies using standard costing systems wait for actual product cost data before recording transactions related to production.

Accepted Answer

A) True 
 B)False

Question 16

Standard cost information never comes from historical data.

Accepted Answer

A) True 
 B)False

Question 17

Colfax Company incurred production labor costs of $5,400 in February (payable in March)for work requiring 1,100 standard hours at a standard rate of $15 per hour;1,200 actual direct labor hours were worked.Based on this information,which one of the following would be included in the journal entry to record the labor costs?

Accepted Answer

A) $16,500 credit to Work-in-process Inventory. 
B) $1,500 credit to Labor Efficiency Variance. 
C) $16,200 credit to Wages Payable. 
D) $1,500 credit to Labor Rate Variance. 
E) None of the answer choices is correct. 
A) $16,500 credit to Work-in-process Inventory. 
B) $1,500 credit to Labor Efficiency Variance. 
C) $16,200 credit to Wages Payable. 
D) $1,500 credit to Labor Rate Variance. 
E) None of the answer choices is correct.

Question 18

Exhibit 10-4
Zingler Inc.applies variable manufacturing overhead at a standard rate of $9 per direct labor hour.The standard quantity of direct labor is 4 hours per unit.Variable overhead costs totaled $90,000 for the month of December.A total of 15,000 direct labor hours were worked during December to produce 4,000 units.
-Refer to Exhibit 10-4.Based on this information,what is the variable overhead efficiency variance?

Accepted Answer

A) $48,000 favorable 
B) $48,000 unfavorable 
C) $9,000 unfavorable 
D) $9,000 favorable 
E) None of the answer choices is correct. 
A) $48,000 favorable 
B) $48,000 unfavorable 
C) $9,000 unfavorable 
D) $9,000 favorable 
E) None of the answer choices is correct.

Question 19

Jake's Cheese Company produces gourmet cheese for resale at local grocery stores.The master budget indicates that the company expects to use 3.0 pounds of direct materials for each unit produced at a cost of $8.00 per pound (one unit = one batch of cheese).Each unit produced will require 0.50 direct labor hours at a cost of $10.00 per hour.Variable manufacturing overhead is applied based on direct labor hours at a rate of $5.00 per hour.Last year's sales were expected to total 50,000 units.Jake just received last year's actual results showing sales of 45,000 units.
(1)Calculate the standard cost per unit for direct materials,direct labor,and variable manufacturing overhead.
(2)Prepare a flexible budget based on actual sales for direct materials,direct labor,and variable manufacturing overhead.

Accepted Answer

The answer of Jake's Cheese Company produces gourmet cheese for...

Question 20

Exhibit 10-3
Glenbrook Inc.has the following standard costs the one product the company produces.
Direct Materials (2 pounds at $18.00 per pound)= $36.00 per unit
Direct Labor (0.6 hours at $48.00 per hour)= $28.80 per unit
During March,Glenbrook produced 2,000 units,bought and used 4,200 pounds of direct materials at $19.20 per pound,and used 1,100 hours of labor at a total cost of $56,100.
-Refer to Exhibit 10-3.Based on this information,what is the direct labor rate variance?

Accepted Answer

A) $3,600 unfavorable 
B) $3,600 favorable 
C) $3,300 favorable 
D) $3,300 unfavorable 
E) None of the answer choices is correct. 
A) $3,600 unfavorable 
B) $3,600 favorable 
C) $3,300 favorable 
D) $3,300 unfavorable 
E) None of the answer choices is correct.

Standard cost typically refers to costs per unit for direct materials,direct labor,and variable overhead.

Which of the following is true about "management by exception"?

Management by exception is a term used to describe managers who look at all variances,regardless of the amount.

A higher mix of skilled indirect labor workers typically results in an unfavorable variable overhead spending variance.

If a company has a favorable materials quantity variance of $3,300,the journal entry to record the use of direct materials in production along with this related quantity variance would include:

If an analysis shows an unfavorable labor rate variance of $18,000 and a favorable labor efficiency variance of $10,000,the entry to record the cost of direct labor and related variances would include:

Most managers prefer attainable standards rather than ideal standards for the following reasons except:

When ideal standards are used,which of the following is most likely true?

Regardless of whether a company uses the traditional costing approach or an activity-based costing approach,the process of performing variance analysis is similar.

The labor rate variance is defined as the difference between actual costs for direct labor and budgeted costs based on the standards.

Which of the following would most likely be the reason for an unfavorable labor efficiency variance?

Which of the following remains the same when comparing a flexible budget to a master budget?

Companies using standard costing systems wait for actual product cost data before recording transactions related to production.

Standard cost information never comes from historical data.

What Is Managerial Accounting

How Is Job Costing Used to Track Production Costs

How Does an Organization Use Activity-Based Costing to Allocate Overhead Costs

How Is Process Costing Used to Track Production Costs

How Do Organizations Identify Cost Behavior Patterns

How Is Cost-Volume-Profit Analysis Used for Decision Making

How Are Relevant Revenues and Costs Used to Make Decisions

How Is Capital Budgeting Used to Make Decisions

How Are Operating Budgets Created

How Do Managers Evaluate Performance in Decentralized Organizations

How Is the Statement of Cash Flows Prepared and Used

How Do Managers Use Financial and Nonfinancial Performance Measures

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Exam 10: How Do Managers Evaluate Performance Using Cost Variance Analysis

Standard cost typically refers to costs per unit for direct materials,direct labor,and variable overhead.

Which of the following is true about "management by exception"?

Management by exception is a term used to describe managers who look at all variances,regardless of the amount.

A higher mix of skilled indirect labor workers typically results in an unfavorable variable overhead spending variance.

If a company has a favorable materials quantity variance of $3,300,the journal entry to record the use of direct materials in production along with this related quantity variance would include:

If an analysis shows an unfavorable labor rate variance of $18,000 and a favorable labor efficiency variance of $10,000,the entry to record the cost of direct labor and related variances would include:

Most managers prefer attainable standards rather than ideal standards for the following reasons except:

When ideal standards are used,which of the following is most likely true?

Regardless of whether a company uses the traditional costing approach or an activity-based costing approach,the process of performing variance analysis is similar.

The labor rate variance is defined as the difference between actual costs for direct labor and budgeted costs based on the standards.

Which of the following would most likely be the reason for an unfavorable labor efficiency variance?

Which of the following remains the same when comparing a flexible budget to a master budget?

Companies using standard costing systems wait for actual product cost data before recording transactions related to production.

Standard cost information never comes from historical data.

What Is Managerial Accounting

How Is Job Costing Used to Track Production Costs

How Does an Organization Use Activity-Based Costing to Allocate Overhead Costs

How Is Process Costing Used to Track Production Costs

How Do Organizations Identify Cost Behavior Patterns

How Is Cost-Volume-Profit Analysis Used for Decision Making

How Are Relevant Revenues and Costs Used to Make Decisions

How Is Capital Budgeting Used to Make Decisions

How Are Operating Budgets Created

How Do Managers Evaluate Performance in Decentralized Organizations

How Is the Statement of Cash Flows Prepared and Used

How Do Managers Use Financial and Nonfinancial Performance Measures

Filters