Question 1

Standard cost systems can enhance operational control through the use of

Accepted Answer

A)  price variances, which indicate the need for enhanced spending control 
B)  efficiency variances, which indicate the need for corrective action 
C)  standard costs, which indicate the desired cost of a unit of input 
D)  actual costs, which indicate the price received for units sold 
A)  price variances, which indicate the need for enhanced spending control 
B)  efficiency variances, which indicate the need for corrective action 
C)  standard costs, which indicate the desired cost of a unit of input 
D)  actual costs, which indicate the price received for units sold B

Question 2

Price variances focus on the difference between

Accepted Answer

A)  actual price and standard price for actual quantity allowed for units actually produced 
B)  actual price and standard price for standard quantity allowed for units actually produced 
C)  actual price and standard price for actual quantity allowed for estimated activity 
D)  none of the above 
A)  actual price and standard price for actual quantity allowed for units actually produced 
B)  actual price and standard price for standard quantity allowed for units actually produced 
C)  actual price and standard price for actual quantity allowed for estimated activity 
D)  none of the above A

Question 3

The purchase of inferior direct materials at a lower price might affect which of the following variances?

Accepted Answer

A)  materials price variance 
B)  materials usage variance 
C)  labour efficiency variance 
D)  all of the above 
A)  materials price variance 
B)  materials usage variance 
C)  labour efficiency variance 
D)  all of the above D

Question 4

The materials usage variance is calculated as

Accepted Answer

A)  (Actual price - Standard price) x Actual quantity 
B)  (Actual price - Standard price) x Standard quantity 
C)  (Actual quantity - Standard quantity) x Actual price 
D)  (Actual quantity - Standard quantity) x Standard price 
A)  (Actual price - Standard price) x Actual quantity 
B)  (Actual price - Standard price) x Standard quantity 
C)  (Actual quantity - Standard quantity) x Actual price 
D)  (Actual quantity - Standard quantity) x Standard price

Question 5

During May, 6,000 pounds of raw materials were purchased at a cost of £2.60 per pound. If there was a favorable materials price variance of £900 for December, the standard cost per pound must be

Accepted Answer

A)  £2.75 
B)  £2.60 
C)  £2.45 
D)  none of the above 
A)  £2.75 
B)  £2.60 
C)  £2.45 
D)  none of the above

Question 6

Vernon Manufacturing has developed the following standards for one of its products:
The company records materials price variances at the time of purchase.
The following activities occurred during the month of April:
   Required:
   
a.
Calculate the materials price variance and indicate whether it is favorable or unfavorable.
b.
Calculate the materials usage variance and indicate whether it is favorable or unfavorable.
c.
Calculate the labour rate variance and indicate whether it is favorable or unfavorable.
d.
Calculate the labour efficiency variance and indicate whether it is favorable or unfavorable.
e.
Calculate the variable overhead spending (expenditure)variance and indicate whether it is favorable or unfavorable.
 
f. Calculate the variable overhead efficiency variance and indicate whether it is favorable or unfavorable.

Accepted Answer

The answer of Vernon Manufacturing has developed the following standards...

Question 7

Figure 4
Shannon Ltd.'s standard cost card contained the following information:
Direct labour: 1.25 hours x £8.00 per hour = £10.00
Shannon planned to make 12,000 units. Shannon actually made 10,000 units using 13,000 hours.
-Refer to Figure 4. If Shannon's actual labour cost was £136,500, Shannon's labour rate variance was

Accepted Answer

A)  £32,500 unfavorable 
B)  £32,500 favorable 
C)  £6,500 unfavorable 
D)  £6,500 favorable 
A)  £32,500 unfavorable 
B)  £32,500 favorable 
C)  £6,500 unfavorable 
D)  £6,500 favorable

Question 8

Figure 2
Rax Company has developed the following standards for one of its products:
The following activities occurred during the month of October:
   The company records materials price variances at the time of purchase.
  
-Refer to Figure 2. Rax's materials price variance would be

Accepted Answer

A)  £4,000 unfavorable 
B)  £4,000 favorable 
C)  £1,600 unfavorable 
D)  £1,600 favorable 
A)  £4,000 unfavorable 
B)  £4,000 favorable 
C)  £1,600 unfavorable 
D)  £1,600 favorable

Question 9

If a company was concerned with controlling expenditures on overhead items, which variance would be useful?

Accepted Answer

A)  fixed overhead volume variance 
B)  variable overhead efficiency variance 
C)  variable overhead spending (expenditure)variance 
D)  both b and c 
A)  fixed overhead volume variance 
B)  variable overhead efficiency variance 
C)  variable overhead spending (expenditure)variance 
D)  both b and c

Question 10

Fosse Manufacturing Company has developed the following standards for one of their products:
The company records materials price variances at the time of purchase.
The following activities occurred during the month of May:
   Required:
   
a.
Calculate the materials price variance and indicate whether it is favorable or unfavorable.
b.
Calculate the materials usage variance and indicate whether it is favorable or unfavorable.
c.
Calculate the labour rate variance and indicate whether it is favorable or unfavorable.
d.
Calculate the labour efficiency variance and indicate whether it is favorable or unfavorable.
e.
Calculate the variable overhead spending (expenditure) variance and indicate whether it is favorable or unfavorable.
 
f. Calculate the variable overhead efficiency variance and indicate whether it is favorable or unfavorable.

Accepted Answer

The answer of Fosse Manufacturing Company has developed the following...

Question 11

Figure 7
Orient Company has developed the following standards for one of its products:
The following activities occurred during the month of November:
   The company records materials price variances at the time of purchase.
  
-Refer to Figure 7. Orient's labour efficiency variance would be

Accepted Answer

A)  £12,000 unfavorable 
B)  £12,000 favorable 
C)  £8,400 favorable 
D)  £3,600 unfavorable 
A)  £12,000 unfavorable 
B)  £12,000 favorable 
C)  £8,400 favorable 
D)  £3,600 unfavorable

Question 12

The two variances for variable overhead are

Accepted Answer

A)  spending (expenditure) and efficiency variances 
B)  spending and budget variances 
C)  budget and volume variances 
D)  budget and efficiency variances 
A)  spending (expenditure) and efficiency variances 
B)  spending and budget variances 
C)  budget and volume variances 
D)  budget and efficiency variances

Question 13

The following budgeted and actual contribution statement is for a component sold by Dark, Inc. for June of this year:
Required:
   
a.
Compute the sales price variance, the net sales volume variance, and the operating cost variance for June.
b.
Use the calculations in part a. to reconcile the budgeted and actual contribution to corporate costs and profits.
c.
How would you evaluate the performance of Dark, Inc.'s manager?

Accepted Answer

The answer of The following budgeted and actual contribution statement...

Question 14

An unfavorable materials price variance may be caused by

Accepted Answer

A)  excessive rework 
B)  a special price offered by suppliers 
C)  use of experienced workers 
D)  none of the above 
A)  excessive rework 
B)  a special price offered by suppliers 
C)  use of experienced workers 
D)  none of the above

Question 15

Figure 3
Tuvok Ltd. has developed the following standards for one of its products:
  
-Refer to Figure 3. Tuvok's materials usage variance is

Accepted Answer

A)  £1,000 unfavorable 
B)  £1,100 unfavorable 
C)  £2,000 unfavorable 
D)  cannot be determined from the information given 
A)  £1,000 unfavorable 
B)  £1,100 unfavorable 
C)  £2,000 unfavorable 
D)  cannot be determined from the information given

Question 16

Which of the following is NOT true about currently attainable standards?

Accepted Answer

A)  They are based on an efficiently operating work force. 
B)  They are based on ideal conditions. 
C)  They allow for downtime and rest periods. 
D)  They are based on present production processes and technology. 
A)  They are based on an efficiently operating work force. 
B)  They are based on ideal conditions. 
C)  They allow for downtime and rest periods. 
D)  They are based on present production processes and technology.

Question 17

Which statement about the selection of standards is true?

Accepted Answer

A)  Ideal standards tend to extract higher performance levels since they give employees something to live up to. 
B)  Currently attainable standards may encourage operating inefficiencies. 
C)  Currently attainable standards discourage employees from achieving their full performance potential. 
D)  Ideal standards demand maximum efficiency, which may leave workers frustrated, thus causing a decline in performance. 
A)  Ideal standards tend to extract higher performance levels since they give employees something to live up to. 
B)  Currently attainable standards may encourage operating inefficiencies. 
C)  Currently attainable standards discourage employees from achieving their full performance potential. 
D)  Ideal standards demand maximum efficiency, which may leave workers frustrated, thus causing a decline in performance.

Question 18

Lisle Manufacturing has developed the following standards for one of its products:
The company records materials price variances at the time of purchase.
During August, Lisle purchased 16,000 yards of material costing £169,600 and used 12,500 yards in its manufacturing process. There was no material inventory at August 1. Lisle recorded a total of 4,600 direct labour hours worked for a total payroll of £72,680. Lisle manufactured 1,200 units in August.
Required:
   
a.
Calculate the materials price variance and indicate whether it is favorable or unfavorable.
b.
Calculate the materials usage variance and indicate whether it is favorable or unfavorable.
c.
Calculate the labour rate variance and indicate whether it is favorable or unfavorable.
d.
Calculate the labour efficiency variance and indicate whether it is favorable or unfavorable.

Accepted Answer

The answer of Lisle Manufacturing has developed the following standards...

Question 19

Figure 6
  
-Refer to Figure 6. The standard rate for total overhead is

Accepted Answer

A)  £14 
B)  £13 
C)  £10 
D)  £4 
A)  £14 
B)  £13 
C)  £10 
D)  £4

Question 20

If variable overhead is applied based on direct labour hours and there is an unfavorable labour efficiency variance,

Accepted Answer

A)  the materials usage variance will be unfavorable 
B)  the labour rate variance will be favorable 
C)  the variable overhead efficiency variance will be unfavorable 
D)  the variable overhead spending (expenditure)variance will be unfavorable 
A)  the materials usage variance will be unfavorable 
B)  the labour rate variance will be favorable 
C)  the variable overhead efficiency variance will be unfavorable 
D)  the variable overhead spending (expenditure)variance will be unfavorable

Standard cost systems can enhance operational control through the use of

Price variances focus on the difference between

The purchase of inferior direct materials at a lower price might affect which of the following variances?

The materials usage variance is calculated as

During May, 6,000 pounds of raw materials were purchased at a cost of £2.60 per pound. If there was a favorable materials price variance of £900 for December, the standard cost per pound must be

Figure 2 Rax Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 2. Rax's materials price variance would be

If a company was concerned with controlling expenditures on overhead items, which variance would be useful?

Figure 7 Orient Company has developed the following standards for one of its products: The following activities occurred during the month of November: The company records materials price variances at the time of purchase. -Refer to Figure 7. Orient's labour efficiency variance would be

The two variances for variable overhead are

An unfavorable materials price variance may be caused by

Figure 3 Tuvok Ltd. has developed the following standards for one of its products: -Refer to Figure 3. Tuvok's materials usage variance is

Which of the following is NOT true about currently attainable standards?

Which statement about the selection of standards is true?

Figure 6 -Refer to Figure 6. The standard rate for total overhead is

If variable overhead is applied based on direct labour hours and there is an unfavorable labour efficiency variance,

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Performance Management

Filters

Exam 11: Standard Costing and Variance Analysis

Standard cost systems can enhance operational control through the use of

Price variances focus on the difference between

The purchase of inferior direct materials at a lower price might affect which of the following variances?

The materials usage variance is calculated as

During May, 6,000 pounds of raw materials were purchased at a cost of £2.60 per pound. If there was a favorable materials price variance of £900 for December, the standard cost per pound must be

Figure 2 Rax Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 2. Rax's materials price variance would be

If a company was concerned with controlling expenditures on overhead items, which variance would be useful?

Figure 7 Orient Company has developed the following standards for one of its products: The following activities occurred during the month of November: The company records materials price variances at the time of purchase. -Refer to Figure 7. Orient's labour efficiency variance would be

The two variances for variable overhead are

An unfavorable materials price variance may be caused by

Figure 3 Tuvok Ltd. has developed the following standards for one of its products: -Refer to Figure 3. Tuvok's materials usage variance is

Which of the following is NOT true about currently attainable standards?

Which statement about the selection of standards is true?

Figure 6 -Refer to Figure 6. The standard rate for total overhead is

If variable overhead is applied based on direct labour hours and there is an unfavorable labour efficiency variance,

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Performance Management

Filters