Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

"A favorable direct materials price variance is always good for a company." Is this statement true? Justify your answer.

Accepted Answer

The statement is not true.Favorable dire

Question 3

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 quantity variance for Candy Stores.

Accepted Answer

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

Question 4

It is not necessary to provide an area on the performance report for a manager's reasons for variances.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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 7

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

Question 8

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

The answer of Nexus Star Inc.produces various kinds of oils.One...

Question 9

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 volume variance.

Accepted Answer

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

Question 10

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 materials is

Accepted Answer

A) $45. 
B) $10. 
C) $24. 
D) $33. 
A) $45. 
B) $10. 
C) $24. 
D) $33.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) $10,000 (F) 
B) $10,000 (U) 
C) $40,000 (F) 
D) $40,000 (U) 
A) $10,000 (F) 
B) $10,000 (U) 
C) $40,000 (F) 
D) $40,000 (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

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 overhead cost for each unit is

Accepted Answer

A) $45. 
B) $33. 
C) $30. 
D) $63. 
A) $45. 
B) $33. 
C) $30. 
D) $63.

Question 15

Blue Bull Inc.uses direct labor hours to allocate variable and fixed overhead costs.Under which of the following circumstances would the base used to calculate the variable overhead rate be the same as that used for the fixed overhead rate?

Accepted Answer

A) When actual labor hours are the same as budgeted labor hours 
B) When standard indirect labor hours agree with standard direct labor hours 
C) In all circumstances the base used for each calculation is the same 
D) When the number of labor hours expected to be incurred for the period is the same as normal capacity direct labor hours 
A) When actual labor hours are the same as budgeted labor hours 
B) When standard indirect labor hours agree with standard direct labor hours 
C) In all circumstances the base used for each calculation is the same 
D) When the number of labor hours expected to be incurred for the period is the same as normal capacity direct labor hours

Question 16

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 17

Which of the following is a drawback of using standard costing system?

Accepted Answer

A) It can be expensive and time-consuming to implement. 
B) It distorts actual cost information. 
C) It is often inaccurate. 
D) It is applicable only to manufacturing businesses,not service businesses. 
A) It can be expensive and time-consuming to implement. 
B) It distorts actual cost information. 
C) It is often inaccurate. 
D) It is applicable only to manufacturing businesses,not service businesses.

Question 18

The direct materials price standard is a carefully derived estimate of what a particular type of direct material will cost when purchased during the next accounting period.

Accepted Answer

A) True 
 B)False

Question 19

The responsibility of a production manager is limited to direct materials used.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 24: Standard Costing and Variance Analysis

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

"A favorable direct materials price variance is always good for a company." Is this statement true? Justify your answer.

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 quantity variance for Candy Stores.

It is not necessary to provide an area on the performance report for a manager's reasons for variances.

Which of the following yields the standard direct material cost?

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

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 volume variance.

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 materials is

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

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

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 overhead cost for each unit is

Blue Bull Inc.uses direct labor hours to allocate variable and fixed overhead costs.Under which of the following circumstances would the base used to calculate the variable overhead rate be the same as that used for the fixed overhead rate?

Which of the following is a drawback of using standard costing system?

The direct materials price standard is a carefully derived estimate of what a particular type of direct material will cost when purchased during the next accounting period.

The responsibility of a production manager is limited to direct materials used.

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

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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