Question 1

A direct labor rate variance would occur in which of the following?

Accepted Answer

A) When a production employee takes an unplanned break 
B) When a production employee spends more time producing one product than was expected 
C) When a low-paid production employee performs a task higher than his or her assigned level 
D) When a production employee incurs overtime hours at the same hourly rate as regular pay 
A) When a production employee takes an unplanned break 
B) When a production employee spends more time producing one product than was expected 
C) When a low-paid production employee performs a task higher than his or her assigned level 
D) When a production employee incurs overtime hours at the same hourly rate as regular pay C

Question 2

Candy Stores Inc.gives you the following information: The standard material cost is $7 per pound for a 15 pound bag of chocolate.The following is the actual cost and usage data:
  
-Using the above information provided for Candy Stores,compute the direct materials variance for Candy Stores.

Accepted Answer

A) $186,000 (U) 
B) $144,000 (F) 
C) $186,000 (F) 
D) $42,000 (U) 
A) $186,000 (U) 
B) $144,000 (F) 
C) $186,000 (F) 
D) $42,000 (U) B

Question 3

Standard costs are not used for

Accepted Answer

A) determining actual costs. 
B) preparing budgets and forecasts. 
C) evaluating the performance of workers and management. 
D) developing appropriate selling prices. 
A) determining actual costs. 
B) preparing budgets and forecasts. 
C) evaluating the performance of workers and management. 
D) developing appropriate selling prices. A

Question 4

A variance is the difference between standard costs and actual costs.

Accepted Answer

A) True 
 B)False

Question 5

Comparing "what did happen" with "what should have happened" aids in the performance evaluation of a company.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Discuss standard costing.As part of your discussion,define a standard cost.In addition,compare and contrast standard costs and predetermined overhead costs.Include in your discussion at least three reasons why standard costs are introduced into a cost accounting system.How is a standard cost accounting system useful to management?

Accepted Answer

Standard costs are predetermined realist

Question 8

Which of the following is indicated by a favorable fixed overhead volume variance of a manufacturing company?

Accepted Answer

A) The creation of excess inventory 
B) The actual overhead exceeded the budgeted overhead 
C) Sales exceeded production 
D) Variable overhead costs were less than fixed overhead costs 
A) The creation of excess inventory 
B) The actual overhead exceeded the budgeted overhead 
C) Sales exceeded production 
D) Variable overhead costs were less than fixed overhead costs

Question 9

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

Accepted Answer

A) $4,500 (U). 
B) $500 (F). 
C) $79,500 (U). 
D) $30,000 (F). 
A) $4,500 (U). 
B) $500 (F). 
C) $79,500 (U). 
D) $30,000 (F).

Question 10

The direct materials quantity variance is the difference between the actual quantity used and the standard quantity times the actual price.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

Predetermined overhead costs are the same as actual costs.

Accepted Answer

A) True 
 B)False

Question 14

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 effi

Question 15

Underfoot Products uses standard costing.The following information about overhead was generated during May:   
-Using the above information provided for Underfoot Products,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 16

The total overhead cost variance is equal to the difference between

Accepted Answer

A) fixed overhead costs and variable overhead costs. 
B) estimated overhead rate and applied overhead rate. 
C) actual overhead costs and variable overhead costs. 
D) actual overhead costs and standard overhead costs. 
A) fixed overhead costs and variable overhead costs. 
B) estimated overhead rate and applied overhead rate. 
C) actual overhead costs and variable overhead costs. 
D) actual overhead costs and standard overhead costs.

Question 17

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 18

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.

Question 19

The formula used to compute budgeted total cost at any level of activity is presented in the

Accepted Answer

A) flexible budget. 
B) performance report. 
C) static budget. 
D) cash flow forecast. 
A) flexible budget. 
B) performance report. 
C) static budget. 
D) cash flow forecast.

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 24: Standard Costing and Variance Analysis

A direct labor rate variance would occur in which of the following?

Candy Stores Inc.gives you the following information: The standard material cost is $7 per pound for a 15 pound bag of chocolate.The following is the actual cost and usage data: -Using the above information provided for Candy Stores,compute the direct materials variance for Candy Stores.

Standard costs are not used for

A variance is the difference between standard costs and actual costs.

Comparing "what did happen" with "what should have happened" aids in the performance evaluation of a company.

Standard costs for company products are typically used for all except

Which of the following is indicated by a favorable fixed overhead volume variance of a manufacturing company?

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

The direct materials quantity variance is the difference between the actual quantity used and the standard quantity times the actual price.

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

Predetermined overhead costs are the same as actual costs.

Underfoot Products uses standard costing.The following information about overhead was generated during May: -Using the above information provided for Underfoot Products,compute the fixed overhead variance.

The total overhead cost variance is equal to the difference between

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

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?

The formula used to compute budgeted total cost at any level of activity is presented in the

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

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

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

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

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 and Capital Budgeting

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