Question 1

Standard costing is typically a sophisticated and inexpensive component to add to a company's existing cost accounting system.

Accepted Answer

A) True 
 B)False  False

Question 2

Predetermined overhead costs are the same as standard costs.

Accepted Answer

A) True 
 B)False  False

Question 3

Performance reports normally include all of the following except

Accepted Answer

A)  standard costs. 
B)  normal capacity. 
C)  total plantwide overhead costs. 
D)  budgeted costs. 
A)  standard costs. 
B)  normal capacity. 
C)  total plantwide overhead costs. 
D)  budgeted costs. C

Question 4

Using the following information, compute the standard unit cost of a 20 pound bag of dog food:

Accepted Answer

A)  $2.55 
B)  $2.21 
C)  $2.15 
D)  $2.80 
A)  $2.55 
B)  $2.21 
C)  $2.15 
D)  $2.80

Question 5

The effective evaluation of managers' performance depends on both human factors and company policies. Using variances from standard costs in a manager's performance report adds accuracy to the evaluation process. To ensure effectiveness and fairness when setting up a performance evaluation process, what actions should be taken?

Accepted Answer

A company's management should establish

Question 6

The purchasing agent is responsible for developing the direct materials quantity standard.

Accepted Answer

A) True 
 B)False

Question 7

An expression of the hourly labor pay cost per function or job classification that is expected to exist during the next accounting period is the definition of a

Accepted Answer

A)  direct labor time standard. 
B)  direct materials quantity standard. 
C)  direct labor rate standard. 
D)  variable overhead rate. 
A)  direct labor time standard. 
B)  direct materials quantity standard. 
C)  direct labor rate standard. 
D)  variable overhead rate.

Question 8

Ewing Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year.   The standard unit cost for direct materials is

Accepted Answer

A)  $30. 
B)  $10. 
C)  $50. 
D)  $27. 
A)  $30. 
B)  $10. 
C)  $50. 
D)  $27.

Question 9

Point Company uses the standard costing method. The company's main product is a fine-quality audio speaker that normally takes 0.25 hour to produce. Normal annual capacity is 3,000 direct labor hours, and budgeted fixed overhead costs for the year were $6,750. During the year, the company produced and sold 8,000 units. Actual fixed overhead costs were $4,800. Compute the fixed overhead volume variance.

Accepted Answer

A)  $300 (F) 
B)  $300 (U) 
C)  $1,950 (U) 
D)  $2,250 (U) 
A)  $300 (F) 
B)  $300 (U) 
C)  $1,950 (U) 
D)  $2,250 (U)

Question 10

Using the labor time standard of 0.5 labor hour per unit and a labor cost standard of $10 per labor hour for a 10 pound bag of chocolate and the following actual cost and usage data, compute the direct labor rate variance. Direct labor haurs used  $\quad 4,950 $ hours
Total cost of direct labor $\quad \$ 53,460$
Number of good urits produced $\quad 9,000 $units

Accepted Answer

A)  $4,500 (U) 
B)  $4,500 (F) 
C)  $3,960 (F) 
D)  $3,960 (U) 
A)  $4,500 (U) 
B)  $4,500 (F) 
C)  $3,960 (F) 
D)  $3,960 (U)

Question 11

Standard costs are realistically predetermined costs of direct materials, direct labor, and overhead that usually are expressed as a cost per unit.

Accepted Answer

A) True 
 B)False

Question 12

When actual capacity exceeds expected capacity, the result is a(n)

Accepted Answer

A)  favorable fixed overhead volume variance. 
B)  favorable materials quantity variance. 
C)  unfavorable overhead variance. 
D)  unfavorable materials quantity variance. 
A)  favorable fixed overhead volume variance. 
B)  favorable materials quantity variance. 
C)  unfavorable overhead variance. 
D)  unfavorable materials quantity variance.

Question 13

The standard fixed overhead rate is usually based on the expected number of standard machine hours.

Accepted Answer

A) True 
 B)False

Question 14

Multiplying the standard price of direct materials by the standard quantity for direct materials yields

Accepted Answer

A)  the direct materials price variance. 
B)  the direct materials quantity variance. 
C)  the standard direct materials cost. 
D)  nothing; the two components should be added together. 
A)  the direct materials price variance. 
B)  the direct materials quantity variance. 
C)  the standard direct materials cost. 
D)  nothing; the two components should be added together.

Question 15

Ewing Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year.   The standard unit cost for direct labor is

Accepted Answer

A)  $45. 
B)  $27. 
C)  $135. 
D)  $9. 
A)  $45. 
B)  $27. 
C)  $135. 
D)  $9.

Question 16

A standard costing system

Accepted Answer

A)  is not typically used by management for cost planning and cost control purposes. 
B)  is a system in which all costs affecting the three inventory accounts and the Cost of Goods Sold account are stated in terms of actual costs incurred. 
C)  depends on actual costs rather than planned costs. 
D)  is employed with an existing job order costing or process costing system and is not a full cost accounting system in itself. 
A)  is not typically used by management for cost planning and cost control purposes. 
B)  is a system in which all costs affecting the three inventory accounts and the Cost of Goods Sold account are stated in terms of actual costs incurred. 
C)  depends on actual costs rather than planned costs. 
D)  is employed with an existing job order costing or process costing system and is not a full cost accounting system in itself.

Question 17

Point Company uses the standard costing method. The company's main product is a fine-quality audio speaker that normally takes 0.25 hour to produce. Normal annual capacity is 3,000 direct labor hours, and budgeted fixed overhead costs for the year were $6,750. During the year, the company produced and sold 8,000 units. Actual fixed overhead costs were $4,800. Compute the fixed overhead variance.

Accepted Answer

A)  $300 (F) 
B)  $300 (U) 
C)  $1,950 (U) 
D)  $2,250 (U) 
A)  $300 (F) 
B)  $300 (U) 
C)  $1,950 (U) 
D)  $2,250 (U)

Question 18

Lucas Company has set standards for the manufacturing of clay pots to be 2 pounds of direct materials, per pot, at a cost of $3 per pound. During the current period, 600 pounds of direct materials were purchased for $1872. All of the direct materials were used to manufacture 295 pots. Lucas's direct materials price variance was

Accepted Answer

A)  $102 (U). 
B)  $72 (U). 
C)  $102 (F). 
D)  zero. 
A)  $102 (U). 
B)  $72 (U). 
C)  $102 (F). 
D)  zero.

Question 19

Sweet Dreams manufactures candy. Its records revealed the following data: $$\begin{array} { l l } 
\text { Number af urits produced } & 4,000 \
\text { Standard direct labor hours per unit } & 2 \
\text { Standard variable overhead rate } & \$ 2.50 \text { per hour } \
\text { Standard fixed overhead rate } & \$ 5.00 \mathrm { per } \text { hour } \
\text { Budgeted Eixed overhead costs } & \$ 40,800 \
\text { Actual variable cverhead costs } & \$ 16,800 \
\text { Actual fixed overhead costs } & \$ 40,400 \
\text { Actual labor hours } & 8,000 \text { direct labor hours } \
\text { Total actual dverhead } & \$ 57,200
\end{array}$$ The total variable overhead variance is

Accepted Answer

A)  $3,200 (U). 
B)  $3,200 (F). 
C)  $3,600 (F). 
D)  $0. 
A)  $3,200 (U). 
B)  $3,200 (F). 
C)  $3,600 (F). 
D)  $0.

Question 20

A summary of expected costs for a range of activity levels that is geared to changes in the level of productive output is the definition of a

Accepted Answer

A)  continuous budget. 
B)  flexible budget. 
C)  master budget. 
D)  period budget. 
A)  continuous budget. 
B)  flexible budget. 
C)  master budget. 
D)  period budget.

Exam 26: Standard Costing and Variance Analysis

Standard costing is typically a sophisticated and inexpensive component to add to a company's existing cost accounting system.

Predetermined overhead costs are the same as standard costs.

Performance reports normally include all of the following except

Using the following information, compute the standard unit cost of a 20 pound bag of dog food:

The purchasing agent is responsible for developing the direct materials quantity standard.

An expression of the hourly labor pay cost per function or job classification that is expected to exist during the next accounting period is the definition of a

Ewing Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year. The standard unit cost for direct materials is

Standard costs are realistically predetermined costs of direct materials, direct labor, and overhead that usually are expressed as a cost per unit.

When actual capacity exceeds expected capacity, the result is a(n)

The standard fixed overhead rate is usually based on the expected number of standard machine hours.

Multiplying the standard price of direct materials by the standard quantity for direct materials yields

Ewing Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year. The standard unit cost for direct labor is

A standard costing system

A summary of expected costs for a range of activity levels that is geared to changes in the level of productive output is the definition of a

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Short Run Decision Analysis

Capital Investment Analysis

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