Question 1

The direct labor rate variance is the difference between the standard hours allowed and the actual hours multiplied by the actual labor rate.

Accepted Answer

A) True 
 B)False  False

Question 2

Nexus Star Inc.produces various kinds of oils.One of its product,Product X,is made from castor oil,beeswax,aloe vera,and a base compound.
For the next 12 months,the company's purchasing agent believes that the cost of ingredients will be as follows:
 
 The direct labor time standard is 3.50 hours per unit at a standard direct labor rate of $12.00 per hour.The standard overhead rates are $15.00 per direct labor hour for the standard variable overhead rate and $13.00 per direct labor hour for the standard fixed overhead rate.
a.Using these production standards,compute the standard unit cost of direct materials per unit if it takes 0.50 gallon of castor oil,1 pound of beeswax,0.25 gallon of aloe vera,and 1 gallon of base compound to produce one unit of product X.Round values to two decimal places.
b.Using the standard unit cost of direct materials per case determined in (a)and the production standards given for direct labor and overhead,compute the standard unit cost of one unit of product X.

Accepted Answer

a.
 
b.

Question 3

The variable overhead efficiency variance is the difference between actual total overhead costs incurred and the total overhead costs applied using the standard overhead rates.

Accepted Answer

A) True 
 B)False  False

Question 4

The static budget can be adjusted automatically for changes in the level of output.

Accepted Answer

A) True 
 B)False

Question 5

The standard overhead cost is the sum of the estimates of variable and fixed overhead costs in the next accounting period.

Accepted Answer

A) True 
 B)False

Question 6

Discuss the keys to preparing a performance report based on standard costs and related variances.

Accepted Answer

The keys to a successful performance rep

Question 7

A standard unit cost can be determined after developing standard costs for direct materials,direct labor,and variable and fixed overhead.

Accepted Answer

A) True 
 B)False

Question 8

A performance report should contain cost or revenue items that the manager receiving the report can control.

Accepted Answer

A) True 
 B)False

Question 9

Predetermined overhead costs are the same as actual costs.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following costs generally do not include standard unit costs?

Accepted Answer

A) Direct materials costs 
B) Indirect materials costs 
C) Board of directors' salary 
D) Depreciation on factory machine 
A) Direct materials costs 
B) Indirect materials costs 
C) Board of directors' salary 
D) Depreciation on factory machine

Question 11

Robert Inc.uses the standard costing method.The company's main product is a fine-quality headphones that normally takes 0.5 hour to produce.Normal annual capacity is 5,000 direct labor hours,and budgeted fixed overhead costs for the year were $8,750.During the year,the company produced and sold 5,800 units.Actual fixed overhead costs were $6,000. Using the information provided for Robert Inc.
-Compute the fixed overhead cost variance.

Accepted Answer

A) $2,750 (F) 
B) $925 (U) 
C) $3,675 (U) 
D) $5,800 (U) 
A) $2,750 (F) 
B) $925 (U) 
C) $3,675 (U) 
D) $5,800 (U)

Question 12

For which of the following can a standard cost accounting system be used?

Accepted Answer

A) Direct materials 
B) Overhead 
C) Direct labor 
D) All of these 
A) Direct materials 
B) Overhead 
C) Direct labor 
D) All of these

Question 13

In a fully integrated standard costing system,standard costs eventually flow into the

Accepted Answer

A) Cost of Goods Sold account. 
B) Standard Cost account. 
C) Selling and Administrative Expenses account. 
D) Sales account. 
A) Cost of Goods Sold account. 
B) Standard Cost account. 
C) Selling and Administrative Expenses account. 
D) Sales account.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Standard costs are based solely on actual costs incurred in past.

Accepted Answer

A) True 
 B)False

Question 16

Standard costs for company products are typically used for all except

Accepted Answer

A) variance analysis and cost control. 
B) computing production costs in operating budgets. 
C) determining the actual cost of direct materials and direct labor used in production. 
D) comparing the production costs for performance measurement purposes. 
A) variance analysis and cost control. 
B) computing production costs in operating budgets. 
C) determining the actual cost of direct materials and direct labor used in production. 
D) comparing the production costs for performance measurement purposes.

Question 17

Choco Sweet Inc.gives you the following information: The standard labor time of 0.75 labor hour is required to produce one unit.The standard labor cost for a 10 pound bag of chocolate is $8 per labor hour.The following is data relating to the actual cost and usage data.
  Using the above information provided for Choco Sweet.
-Compute the direct labor rate variance for Choco Sweet Inc.

Accepted Answer

A) $8,500 (F) 
B) $11,688 (U) 
C) $6,000 (F) 
D) $2,500 (U) 
A) $8,500 (F) 
B) $11,688 (U) 
C) $6,000 (F) 
D) $2,500 (U)

Question 18

The final step in variance analysis is taking appropriate corrective action.

Accepted Answer

A) True 
 B)False

Question 19

The primary difference between a fixed (static)budget and a flexible budget is that a fixed budget

Accepted Answer

A) cannot be changed after the period begins,whereas a flexible budget can be changed after the period begins. 
B) is concerned only with future acquisitions of fixed assets,whereas a flexible budget is concerned with expenses that vary with sales. 
C) is a plan for a single level of production,whereas a flexible budget is several plans (one for each of several production levels). 
D) includes only fixed costs,whereas a flexible budget includes only variable costs. 
A) cannot be changed after the period begins,whereas a flexible budget can be changed after the period begins. 
B) is concerned only with future acquisitions of fixed assets,whereas a flexible budget is concerned with expenses that vary with sales. 
C) is a plan for a single level of production,whereas a flexible budget is several plans (one for each of several production levels). 
D) includes only fixed costs,whereas a flexible budget includes only variable costs.

Question 20

In standard costing,

Accepted Answer

A) the standards are developed only for overhead costs. 
B) the standards are developed primarily from past costs. 
C) comparisons with actual costs usually are not performed. 
D) debit and credit entries to inventory accounts are made at standard costs. 
A) the standards are developed only for overhead costs. 
B) the standards are developed primarily from past costs. 
C) comparisons with actual costs usually are not performed. 
D) debit and credit entries to inventory accounts are made at standard costs.

Exam 22: Standard Costing and Variance Analysis

The direct labor rate variance is the difference between the standard hours allowed and the actual hours multiplied by the actual labor rate.

The variable overhead efficiency variance is the difference between actual total overhead costs incurred and the total overhead costs applied using the standard overhead rates.

The static budget can be adjusted automatically for changes in the level of output.

The standard overhead cost is the sum of the estimates of variable and fixed overhead costs in the next accounting period.

Discuss the keys to preparing a performance report based on standard costs and related variances.

A standard unit cost can be determined after developing standard costs for direct materials,direct labor,and variable and fixed overhead.

A performance report should contain cost or revenue items that the manager receiving the report can control.

Predetermined overhead costs are the same as actual costs.

Which of the following costs generally do not include standard unit costs?

For which of the following can a standard cost accounting system be used?

In a fully integrated standard costing system,standard costs eventually flow into the

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

Standard costs are based solely on actual costs incurred in past.

Standard costs for company products are typically used for all except

The final step in variance analysis is taking appropriate corrective action.

The primary difference between a fixed (static)budget and a flexible budget is that a fixed budget

In standard costing,

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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