Question 1

Corrective action is necessary even if a variance is insignificant.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following yields the standard direct material cost?

Accepted Answer

A) Multiplying the standard price of direct materials by the standard quantity for direct materials 
B) Adding the standard price of direct materials to the standard quantity for direct materials 
C) Multiplying the actual price of direct materials by the actual quantity for direct materials 
D) Adding the actual price of direct materials to the actual quantity for direct materials 
A) Multiplying the standard price of direct materials by the standard quantity for direct materials 
B) Adding the standard price of direct materials to the standard quantity for direct materials 
C) Multiplying the actual price of direct materials by the actual quantity for direct materials 
D) Adding the actual price of direct materials to the actual quantity for direct materials

Question 3

A flexible budget is a summary of expected costs for a range of activity levels and is geared to changes in the level of productive output.

Accepted Answer

A) True 
 B)False

Question 4

Variance analysis involves computing the difference between standard and actual costs.

Accepted Answer

A) True 
 B)False

Question 5

Sport Runner Inc. ,produces a complete line of men's running apparel.The nylon short set is a very popular item in the southern states.During June,the company's records revealed the following information about the production of the nylon shorts set:
  Compute the standard unit cost for a nylon shorts set.

Accepted Answer

The answer of Sport Runner Inc. ,produces a complete line...

Question 6

The direct materials price variance is the difference between the standard price and the actual price,multiplied by the actual quantity.

Accepted Answer

A) True 
 B)False

Question 7

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 budget variance.

Accepted Answer

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

Question 8

Fantastic Lips Inc.specializes in manufacturing lipstick.Racy Red,one of more than 75 shades produced by the company,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 4 hours per case at a standard direct labor rate of $11.00 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 case of Racy Red if it takes 0.2 gallon of castor oil,0.5 pound of beeswax,0.3 gallon of aloe vera,and 1 gallon of base compound to produce one case.
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 case of Racy Red lipstick.

Accepted Answer

The answer of Fantastic Lips Inc.specializes in manufacturing lipstick.Racy Red,one...

Question 9

Good Sleep Inc.manufactures soft pillows.Its records revealed the following data:   
-Using the above information provided for Good Sleep,the total fixed overhead variance is

Accepted Answer

A) $4,500 (U). 
B) $30,500 (U). 
C) $5,000 (U). 
D) $45,000 (U). 
A) $4,500 (U). 
B) $30,500 (U). 
C) $5,000 (U). 
D) $45,000 (U).

Question 10

Underfoot Products uses standard costing.The following information about overhead was generated during May:   
-Compute the fixed overhead variance.

Accepted Answer

A) $5,000 (F) 
B) $5,000 (U) 
C) $10,000 (U) 
D) $10,000 (F) 
A) $5,000 (F) 
B) $5,000 (U) 
C) $10,000 (U) 
D) $10,000 (F)

Question 11

Which of the following provides an explanation of why the variable overhead rate is separated from the fixed overhead rate in standard costing?

Accepted Answer

A) There is no justifiable reason;their separation is merely to simplify entries. 
B) Both calculations divide by the same direct labor hours,but the numerator is different for each calculation. 
C) The variable overhead rate is calculated using actual direct labor hours,whereas the fixed overhead rate is calculated using normal capacity direct labor hours. 
D) The behavior of costs,used for computing variable overhead rate and fixed overhead rate,differs. 
A) There is no justifiable reason;their separation is merely to simplify entries. 
B) Both calculations divide by the same direct labor hours,but the numerator is different for each calculation. 
C) The variable overhead rate is calculated using actual direct labor hours,whereas the fixed overhead rate is calculated using normal capacity direct labor hours. 
D) The behavior of costs,used for computing variable overhead rate and fixed overhead rate,differs.

Question 12

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 efficiency variance for Choco Sweet.

Accepted Answer

A) $8,500 (U) 
B) $2,500 (F) 
C) $11,000 (F) 
D) $1,375 (U) 
A) $8,500 (U) 
B) $2,500 (F) 
C) $11,000 (F) 
D) $1,375 (U)

Question 13

Crazy Cars Corporation's flexible budget for 30,000 units,for March,gives you the following information:
   The company produced 25,000 units in March with the following actual costs:
   Prepare a performance report for March,to compare the data from Crazy Cars' flexible budget with the actual costs incurred.Also,find if the costs are under or over budgeted.

Accepted Answer

The answer of Crazy Cars Corporation's flexible budget for 30,000...

Question 14

Underfoot Products uses standard costing.The following information about overhead was generated during May:   
-Compute the fixed overhead budget variance.

Accepted Answer

A) $5,000 (F) 
B) $5,000 (U) 
C) $10,000 (F) 
D) $15,000 (F) 
A) $5,000 (F) 
B) $5,000 (U) 
C) $10,000 (F) 
D) $15,000 (F)

Question 15

Direct labor time standards express the hourly labor cost per function or job classification that exists during the current accounting period.

Accepted Answer

A) True 
 B)False

Question 16

Using the information given below,determine the total standard unit cost.
   Round your intermediate calculations and final answers to two decimal places.

Accepted Answer

The answer of Using the information given below,determine the total...

Question 17

Which of the following is true of standard costing?

Accepted Answer

A) It uses estimates that are based only on past costs. 
B) It is the same as normal costing. 
C) It cannot be used to manage cost centers. 
D) It can be used in any type of business. 
A) It uses estimates that are based only on past costs. 
B) It is the same as normal costing. 
C) It cannot be used to manage cost centers. 
D) It can be used in any type of business.

Question 18

Which of the following is not included in performance reports?

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

Question 19

The fixed overhead volume variance measures the use of existing facilities and capacity.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following measures the difference between the quantity of materials actually used to make the product and what the design standard called for?

Accepted Answer

A) Direct labor efficiency variance. 
B) Direct materials price variance. 
C) Direct labor rate variance. 
D) Direct materials usage variance. 
A) Direct labor efficiency variance. 
B) Direct materials price variance. 
C) Direct labor rate variance. 
D) Direct materials usage variance.

Exam 22: Standard Costing and Variance Analysis

Corrective action is necessary even if a variance is insignificant.

Which of the following yields the standard direct material cost?

A flexible budget is a summary of expected costs for a range of activity levels and is geared to changes in the level of productive output.

Variance analysis involves computing the difference between standard and actual costs.

The direct materials price variance is the difference between the standard price and the actual price,multiplied by the actual quantity.

Good Sleep Inc.manufactures soft pillows.Its records revealed the following data: -Using the above information provided for Good Sleep,the total fixed overhead variance is

Underfoot Products uses standard costing.The following information about overhead was generated during May: -Compute the fixed overhead variance.

Which of the following provides an explanation of why the variable overhead rate is separated from the fixed overhead rate in standard costing?

Underfoot Products uses standard costing.The following information about overhead was generated during May: -Compute the fixed overhead budget variance.

Direct labor time standards express the hourly labor cost per function or job classification that exists during the current accounting period.

Using the information given below,determine the total standard unit cost. Round your intermediate calculations and final answers to two decimal places.

Which of the following is true of standard costing?

Which of the following is not included in performance reports?

The fixed overhead volume variance measures the use of existing facilities and capacity.

Which of the following measures the difference between the quantity of materials actually used to make the product and what the design standard called for?

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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