Question 1

Which formula is used to calculate the materials usage variance?

Accepted Answer

A)  (actual price × actual quantity) - (standard price × actual quantity) 
B)  (actual price × standard quantity) - (standard price × actual quantity) 
C)  (standard price × actual quantity) - (standard price × standard quantity) 
D)  (standard price × standard quantity) - (standard price × actual quantity) 
A)  (actual price × actual quantity) - (standard price × actual quantity) 
B)  (actual price × standard quantity) - (standard price × actual quantity) 
C)  (standard price × actual quantity) - (standard price × standard quantity) 
D)  (standard price × standard quantity) - (standard price × actual quantity) C

Question 2

Serenity Equestrian Corporation
Serenity Equestrian Corporation produces high-quality leather saddles. The company has a standard cost system and has set the following standards for materials and labour: $$\begin{array} { l l } 
\text { Leather } ( 20 \text { strips } ( Q , \$ 15 \text { per strip) } & \$ 300 \
\text { Direct labour } ( 15 \text { hours } ( a ) \$ 15 \text { per hour } ) & \$ 225 \
\text { Total prime cost } & \$ 525
\end{array}$$ During the year, the company produced 150 saddles. Actual leather purchased was 3,100 strips at $12 per strip. There were no beginning or ending inventories of leather.Actual direct labour was 2,500 hours at $16 per hour.
-Refer to Serenity Equestrian Corporation. What is the total budget variance for materials?

Accepted Answer

A)  $1,500 U 
B)  $1,500 F 
C)  $7,800 U 
D)  $7,800 F 
A)  $1,500 U 
B)  $1,500 F 
C)  $7,800 U 
D)  $7,800 F D

Question 3

Operating personnel can easily achieve standards set by engineering studies.

Accepted Answer

A) True 
 B)False  False

Question 4

Which statement does NOT accurately describe kaizen costing?

Accepted Answer

A)  It tries to reduce both value-added and non-value-added costs. 
B)  It is concerned with reducing the costs of existing products and processes. 
C)  The kaizen standard reflects the planned improvement for the upcoming period. 
D)  The cost reduction process is accomplished through the repetitive use of the kaizen cycle and the maintenance cycle. 
A)  It tries to reduce both value-added and non-value-added costs. 
B)  It is concerned with reducing the costs of existing products and processes. 
C)  The kaizen standard reflects the planned improvement for the upcoming period. 
D)  The cost reduction process is accomplished through the repetitive use of the kaizen cycle and the maintenance cycle.

Question 5

The sum of the labour rate variance and the labour efficiency variance will NOT add up to the total labour variance.

Accepted Answer

A) True 
 B)False

Question 6

What results from implementing standard cost systems in manufacturing environments that emphasize continuous improvement and just-in-time manufacturing and purchasing?

Accepted Answer

A)  The standard cost system enhances the operational control. 
B)  The operational level will benefit from the detailed computation of variances. 
C)  Variances can be computed and presented in reports to higher-level managers. 
D)  The materials price variance may encourage the purchasing department to buy in smaller quantities to reduce inventories. 
A)  The standard cost system enhances the operational control. 
B)  The operational level will benefit from the detailed computation of variances. 
C)  Variances can be computed and presented in reports to higher-level managers. 
D)  The materials price variance may encourage the purchasing department to buy in smaller quantities to reduce inventories.

Question 7

How are standards developed?

Accepted Answer

Three potential sources of quantity stan

Question 8

Bi-land Company
Bi-land Company's standard cost is $150,000. The allowable deviation is ±10%. The actual costs for six months are as follows: $$\begin{array} { l l } 
\text { January } & \$ 130,000 \
\text { February } & \$ 120,000 \
\text { March } & \$ 145,000 \
\text { April } & \$ 160,000 \
\text { May } & \$ 170,000 \
\text { June } & \$ 180,000
\end{array}$$
-Refer to Bi-land Company. How many months resulted in a variance that is higher than the upper control limit?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  3 
A)  0 
B)  1 
C)  2 
D)  3

Question 9

Currently attainable standards can be achieved under efficient operating conditions.

Accepted Answer

A) True 
 B)False

Question 10

What is emphasized by a company using kaizen costing?

Accepted Answer

A)  reducing quality of inputs 
B)  increasing overhead costs 
C)  reducing non-value-added cost 
D)  reducing the number of employees 
A)  reducing quality of inputs 
B)  increasing overhead costs 
C)  reducing non-value-added cost 
D)  reducing the number of employees

Question 11

Refer to Cakers Express. Assuming the company found that it had an unfavourable materials price variance of $1,000, what is the standard cost of flour?

Accepted Answer

A)  $0.95 /kg 
B)  $1.00 /kg 
C)  $1.95 /kg 
D)  $2.05 /kg 
A)  $0.95 /kg 
B)  $1.00 /kg 
C)  $1.95 /kg 
D)  $2.05 /kg

Question 12

The standard cost sheet provides the input standards needed to compute the total amount of inputs allowed for the actual output, an essential component in computing efficiency variances.

Accepted Answer

A) True 
 B)False

Question 13

The unit standard quantity of inputs is an essential component in the computation of total amount of inputs allowed for the actual output and efficiency variances.

Accepted Answer

A) True 
 B)False

Question 14

Refer to Risco Company. Assuming the company determined that it had a favourable materials usage variance of $2,000, what was the actual quantity of materials used? (Round your answer to the nearest kg)

Accepted Answer

A)  11,875 kg 
B)  12,125 kg 
C)  25,778 kg 
D)  27,778 kg 
A)  11,875 kg 
B)  12,125 kg 
C)  25,778 kg 
D)  27,778 kg

Question 15

What is NOT characteristic of normal costing systems?

Accepted Answer

A)  A normal costing system predetermines overhead costs. 
B)  A normal costing system has less capacity for control than a standard costing system. 
C)  In a normal costing system, overhead is assigned using a budgeted rate and actual activity. 
D)  A normal costing system assigns direct materials and direct labour to products using a predetermined rate. 
A)  A normal costing system predetermines overhead costs. 
B)  A normal costing system has less capacity for control than a standard costing system. 
C)  In a normal costing system, overhead is assigned using a budgeted rate and actual activity. 
D)  A normal costing system assigns direct materials and direct labour to products using a predetermined rate.

Question 16

Bronze Brick Company uses the following rule to determine whether materials usage variances should be investigated:
A materials usage variance will be investigated when the variance is greater than either $5,000 or 12% of the standard cost.
During May, the company purchased and used 11,000 kg of concrete for $5 per kilogram. It was able to make 20,000 bricks. Its standard quantity of materials allowed is 0.50 kg of concrete per brick at a standard price of $6.50 per kilogram.
Required:
A. Determine Bronze's material usage variance and whether it is favourable or unfavourable.
B. Should the variance be investigated?

Accepted Answer

@#IMG-DLM& B. Standard materials cost = 10,000 × $

Question 17

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Actual usage of inputs is less than the standard usage.

Accepted Answer

A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards 
A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards

Question 18

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-This is the standard plus the allowable deviation when determining whether variances are significant.

Accepted Answer

A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards 
A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards

Question 19

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Actual price of inputs is greater than the standard price.

Accepted Answer

A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards 
A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards

Question 20

Islander Corporation manufactures a product with the following standard costs: $$\begin{array} { l r } 
\text { Direct materials } ( 20 \mathrm {~m} ( \$ , \$ 1.85 \text { per metre) } & \$ 37.00 \
\text { Direct labour } ( 4 \text { hours } ( a , \$ 12.00 \text { per hour) } & 48.00
\end{array}$$ Standards are based on normal monthly production involving 2,000 direct labour hours (500 units of output).
The following information pertains to the month of April: $\begin{array}{ll}
\text { Direct materials purchased }(16,000 \mathrm{~m} @ \$ 1.80 \text { per metre }) & \$ 28,800 \
\text { Direct materials used }(9,400 \mathrm{~m}) & \
\text { Direct labour }(1,880 \text { hours } @ \$ 12.20 \text { per hour }) & 22,936\
\text { Actual production in July: } 460 \text { units }
\end{array}$ Required:
A. Compute the following variances for the month of April, indicating whether each variance is favourable or unfavourable:
1) Materials purchase price variance
2) Materials quantity variance
3) Labour rate variance
4) Labour efficiency variance
B. Give potential reasons for each of the variances. Be sure to consider interrelationships among variances.

Accepted Answer

A. Materials purchase price variance = (

Which formula is used to calculate the materials usage variance?

Operating personnel can easily achieve standards set by engineering studies.

Which statement does NOT accurately describe kaizen costing?

The sum of the labour rate variance and the labour efficiency variance will NOT add up to the total labour variance.

What results from implementing standard cost systems in manufacturing environments that emphasize continuous improvement and just-in-time manufacturing and purchasing?

How are standards developed?

Currently attainable standards can be achieved under efficient operating conditions.

What is emphasized by a company using kaizen costing?

Refer to Cakers Express. Assuming the company found that it had an unfavourable materials price variance of $1,000, what is the standard cost of flour?

The standard cost sheet provides the input standards needed to compute the total amount of inputs allowed for the actual output, an essential component in computing efficiency variances.

The unit standard quantity of inputs is an essential component in the computation of total amount of inputs allowed for the actual output and efficiency variances.

Refer to Risco Company. Assuming the company determined that it had a favourable materials usage variance of $2,000, what was the actual quantity of materials used? (Round your answer to the nearest kg)

What is NOT characteristic of normal costing systems?

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Actual usage of inputs is less than the standard usage.

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Actual price of inputs is greater than the standard price.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 10: Standard Costing: a Managerial Control Tool

Which formula is used to calculate the materials usage variance?

Operating personnel can easily achieve standards set by engineering studies.

Which statement does NOT accurately describe kaizen costing?

The sum of the labour rate variance and the labour efficiency variance will NOT add up to the total labour variance.

What results from implementing standard cost systems in manufacturing environments that emphasize continuous improvement and just-in-time manufacturing and purchasing?

How are standards developed?

Currently attainable standards can be achieved under efficient operating conditions.

What is emphasized by a company using kaizen costing?

Refer to Cakers Express. Assuming the company found that it had an unfavourable materials price variance of $1,000, what is the standard cost of flour?

The standard cost sheet provides the input standards needed to compute the total amount of inputs allowed for the actual output, an essential component in computing efficiency variances.

The unit standard quantity of inputs is an essential component in the computation of total amount of inputs allowed for the actual output and efficiency variances.

Refer to Risco Company. Assuming the company determined that it had a favourable materials usage variance of $2,000, what was the actual quantity of materials used? (Round your answer to the nearest kg)

What is NOT characteristic of normal costing systems?

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Actual usage of inputs is less than the standard usage.

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Actual price of inputs is greater than the standard price.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters