Question 1

In a service company,standard unit cost related of a service will typically include direct materials,direct labor,and overhead standard costs.

Accepted Answer

A) True 
 B)False

Question 2

The flexible budget formula is an equation that determines budgeted costs for any level of output.

Accepted Answer

A) True 
 B)False

Question 3

Variance analysis includes all of the following except

Accepted Answer

A) taking corrective action. 
B) investigating all significant and insignificant variances. 
C) developing performance measures to track activities causing the variance. 
D) computing variances. 
A) taking corrective action. 
B) investigating all significant and insignificant variances. 
C) developing performance measures to track activities causing the variance. 
D) computing variances.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

The total overhead cost variance is the difference between what actual overhead cost is and what it should have cost according to the flexible budget for the good units produced.

Accepted Answer

A) True 
 B)False

Question 6

If a company's flexible budget formula is $11.25 per unit plus $72,100,what would be the total budget for evaluating operating performance if 28,650 units were sold and 38,500 units were produced?

Accepted Answer

A) $433,125 
B) $505,225 
C) $811,125 
D) $72,100 
A) $433,125 
B) $505,225 
C) $811,125 
D) $72,100

Question 7

James Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year.   Using the above information provided for James Corporation.
-The total standard unit cost is

Accepted Answer

A) $99. 
B) $132. 
C) $102. 
D) $46. 
A) $99. 
B) $132. 
C) $102. 
D) $46.

Question 8

Differentiate between the variable overhead spending variance and the variance overhead efficiency variance.

Accepted Answer

The variable overhead spending variance

Question 9

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.

Question 10

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 $1,872.All of the direct materials were used to manufacture 295 pots.Lucas' direct materials price variance was

Accepted Answer

A) $102 (U). 
B) $72 (U). 
C) $102 (F). 
D) $70 (U). 
A) $102 (U). 
B) $72 (U). 
C) $102 (F). 
D) $70 (U).

Question 11

Mention a few reasons for an unfavorable direct labor cost variance.

Accepted Answer

An unfavorable labor cost variance can b

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

Keerin Inc. ,produces a complete line of women's athletic apparel.Sweat suits are very popular in the northern states.During August,the company's records revealed the following information about the production of sweat suits:
 
Compute the standard unit cost for a sweat suit.

Accepted Answer

The answer of Keerin Inc. ,produces a complete line of...

Question 14

The total fixed overhead variance is comprised of the

Accepted Answer

A) variable overhead efficiency and fixed variances. 
B) fixed overhead budget and volume variances. 
C) labor efficiency and rate variances. 
D) fixed overhead spending and efficiency variances. 
A) variable overhead efficiency and fixed variances. 
B) fixed overhead budget and volume variances. 
C) labor efficiency and rate variances. 
D) fixed overhead spending and efficiency variances.

Question 15

Powerhorse Inc.manufactures steel hitches for horse trailers.The company's direct labor rates have been set by the terms of the current labor contract.Direct labor rate standards have been assigned for each job classification.In July 2014,a young apprentice was being trained during regular working hours to become a machine operator on one of the turret lathes.A timekeeper determined that the apprentice had spent a total of 48 hours as a novice machine operator in July.Standard time for the same work output is 34 hours.The apprentice earned $6.80 per hour in July.The standard direct labor rate for machine operators working on turret lathes is $9.50 per hour.
a.From the data provided,determine the direct labor efficiency variance and the direct labor rate variance that resulted from the temporary substitution of the apprentice for the regular machine operator.(Note that,according to the labor contract,the apprentice is not entitled to the same rate as a regular machine operator during the training period. )
b.Did the company benefit financially from the situation? Why or why not? (Show calculations. )

Accepted Answer

a.Direct labor effic

Question 16

Harrison Inc.has computed direct labor standards for the manufacture of its product to be 4 hours of labor per product at a cost of $15 per hour.During March,Harrison produced 45 products in 190 hours and incurred direct labor costs of $2,720.Harrison's direct labor efficiency variance was

Accepted Answer

A) $150 (F). 
B) $130 (U). 
C) $150 (U). 
D) $130 (F). 
A) $150 (F). 
B) $130 (U). 
C) $150 (U). 
D) $130 (F).

Question 17

The Lennon Company uses a standard costing system and a flexible budget.At a normal level of activity of 15,000 units and 45,000 standard direct labor hours,the standard direct labor cost would be $270,000.During June,44,950 hours were worked to produce 14,000 units at an actual direct labor cost of $352,000.The direct labor efficiency variance in June was

Accepted Answer

A) $25,700 (U). 
B) $17,700 (U). 
C) $17,700 (F). 
A) $25,700 (U). 
B) $17,700 (U). 
C) $17,700 (F).

Question 18

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

Accepted Answer

A) $24. 
B) $45. 
C) $20. 
D) $63. 
A) $24. 
B) $45. 
C) $20. 
D) $63.

Question 19

Which of the following statements is not true of performance reports?

Accepted Answer

A) Performance reports should be tailored to the responsibilities of the manager or department for which they are prepared. 
B) Performance reports normally report standard costs and variances. 
C) Performance reports should contain space for explanation of variances. 
D) Performance reports do not present the causes of variances. 
A) Performance reports should be tailored to the responsibilities of the manager or department for which they are prepared. 
B) Performance reports normally report standard costs and variances. 
C) Performance reports should contain space for explanation of variances. 
D) Performance reports do not present the causes of variances.

Question 20

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 variance for Choco Sweet Inc.

Accepted Answer

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

Exam 22: Standard Costing and Variance Analysis

In a service company,standard unit cost related of a service will typically include direct materials,direct labor,and overhead standard costs.

The flexible budget formula is an equation that determines budgeted costs for any level of output.

Variance analysis includes all of the following except

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

The total overhead cost variance is the difference between what actual overhead cost is and what it should have cost according to the flexible budget for the good units produced.

If a company's flexible budget formula is $11.25 per unit plus $72,100,what would be the total budget for evaluating operating performance if 28,650 units were sold and 38,500 units were produced?

James Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year. Using the above information provided for James Corporation. -The total standard unit cost is

Differentiate between the variable overhead spending variance and the variance overhead efficiency variance.

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

Mention a few reasons for an unfavorable direct labor cost variance.

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

Keerin Inc. ,produces a complete line of women's athletic apparel.Sweat suits are very popular in the northern states.During August,the company's records revealed the following information about the production of sweat suits: Compute the standard unit cost for a sweat suit.

The total fixed overhead variance is comprised of the

Harrison Inc.has computed direct labor standards for the manufacture of its product to be 4 hours of labor per product at a cost of $15 per hour.During March,Harrison produced 45 products in 190 hours and incurred direct labor costs of $2,720.Harrison's direct labor efficiency variance was

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

Which of the following statements is not true of performance reports?

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

Filters