Question 1

Match the variance with its correct calculation.
-Actual costs

Accepted Answer

A) Actual quantity × actual price 
B) (Actual hours × actual rate) − (standard hours × standard rate) 
C) (Actual quantity × actual price) − (standard quantity × standard price) 
D) (Actual hours − standard hours) × standard rate 
E) (Actual price − standard price) × actual quantity
F)Standard quantity × standard price
G)(Actual rate − standard rate) × actual hours
H)(Actual quantity − standard quantity) × standard price 
A) Actual quantity × actual price 
B) (Actual hours × actual rate) − (standard hours × standard rate) 
C) (Actual quantity × actual price) − (standard quantity × standard price) 
D) (Actual hours − standard hours) × standard rate 
E) (Actual price − standard price) × actual quantity
F)Standard quantity × standard price
G)(Actual rate − standard rate) × actual hours
H)(Actual quantity − standard quantity) × standard price A

Question 2

The quantity of each input that should be used to produce one unit of output is documented on the standard cost sheet.

Accepted Answer

A) True 
 B)False  True

Question 3

What results from implementing standard cost systems in manufacturing environments emphasize continuous improvement and just-in-time manufacturing and purchasing?

Accepted Answer

A) The standard cost system enhances the operational control. 
B) The materials price variance may encourage the purchasing department to buy in smaller quantities to reduce inventories. 
C) Variances can be computed and presented in reports to higher-level managers. 
D) The operational level will benefit from the detailed computation of variances. 
A) The standard cost system enhances the operational control. 
B) The materials price variance may encourage the purchasing department to buy in smaller quantities to reduce inventories. 
C) Variances can be computed and presented in reports to higher-level managers. 
D) The operational level will benefit from the detailed computation of variances. C

Question 4

The standard cost per unit of output for a particular input is calculated by multiplying the standard price per unit by the standard number of units produced.

Accepted Answer

A) True 
 B)False

Question 5

How are standards developed?

Accepted Answer

Three potential sources of quantity stan

Question 6

Standard costs are developed for direct materials,direct labour,and variable overhead only.

Accepted Answer

A) True 
 B)False

Question 7

Appliance Company inspects every steam iron it manufactures for safety issues.The standard labour cost is $12 per hour.The maintenance standard at the beginning of the first quarter is 20 minutes per iron.Appliance is implementing a new production process that will aid in reducing any potential electrical defects in the irons.This will decrease the inspection time to 15 minutes per iron.After the end of the first quarter,the new process had reduced the inspection time per iron from 20 minutes to 14 minutes.
 A. Identify the kaizen and maintenance labour standards in place at the beginning of the first quarter. Express the standards in both physical and financial terms.
B. Calculate the expected cost reduction and actual cost reduction.

Accepted Answer

The answer of Appliance Company inspects every steam iron it...

Question 8

Match the variance with its correct calculation.
-Total materials variance

Accepted Answer

A) Actual quantity × actual price 
B) (Actual hours × actual rate) − (standard hours × standard rate) 
C) (Actual quantity × actual price) − (standard quantity × standard price) 
D) (Actual hours − standard hours) × standard rate 
E) (Actual price − standard price) × actual quantity
F)Standard quantity × standard price
G)(Actual rate − standard rate) × actual hours
H)(Actual quantity − standard quantity) × standard price 
A) Actual quantity × actual price 
B) (Actual hours × actual rate) − (standard hours × standard rate) 
C) (Actual quantity × actual price) − (standard quantity × standard price) 
D) (Actual hours − standard hours) × standard rate 
E) (Actual price − standard price) × actual quantity
F)Standard quantity × standard price
G)(Actual rate − standard rate) × actual hours
H)(Actual quantity − standard quantity) × standard price

Question 9

To compute the standard direct labour hours allowed,multiply the unit labour standard by the standard output.

Accepted Answer

A) True 
 B)False

Question 10

What do variances indicate?

Accepted Answer

A) that actual performance is not going according to plan 
B) the cause of the variance 
C) who is responsible for the variance 
D) when the variance should be investigated 
A) that actual performance is not going according to plan 
B) the cause of the variance 
C) who is responsible for the variance 
D) when the variance should be investigated

Question 11

The Fantastic Tool Company (Mexico Division) produced 100,000 saw blades during the year. Each saw blade required two hours of labour at a rate of $5.50 per hour. However, the company's standard labour rate is $5.00. Its labour efficiency variance was a favourable $55,000.
-Refer to the Figure.What are Fantastic's standard hours allowed for a volume of 100,000 blades?

Accepted Answer

A) 189,000 hours 
B) 190,000 hours 
C) 210,000 hours 
D) 211,000 hours 
A) 189,000 hours 
B) 190,000 hours 
C) 210,000 hours 
D) 211,000 hours

Question 12

Which formula is used to calculate the materials price variance?

Accepted Answer

A) (actual price × actual quantity) − (standard price × standard quantity) 
B) (standard price × actual quantity) − (actual price × actual quality) 
C) (standard price × standard quantity) − (actual price × actual quantity) 
D) (actual price × actual quantity) − (standard price × actual quantity) 
A) (actual price × actual quantity) − (standard price × standard quantity) 
B) (standard price × actual quantity) − (actual price × actual quality) 
C) (standard price × standard quantity) − (actual price × actual quantity) 
D) (actual price × actual quantity) − (standard price × actual quantity)

Question 13

Serenity Equestrian Corporation produces high-quality leather saddles. The company has a standard cost system and has set the following standards for materials and labour:
During the year, Serenity Equestrian Corporation produced 150 saddles. Actual leather purchased was 3,100 strips at $12 per strip. There were no beginning or ending inventories of leather. Actual direct labour was 2,500 hours at $16 per hour.
 $\begin{array}{lll}
\text {Leather (20 strips@ $ \$ 15 $ per strip)}&\$300\
\text {Direct labour ( 15 hours $ @ \$ 15 $ per hour) }&225\
\text {Total prime cost  }&\$252\
\end{array}$

-Refer to the Figure.What are the total budget variances for materials and labour,respectively?

Accepted Answer

A) $1,500 U and $3,750 U 
B) $1,500 F and $3,750 F 
C) $7,800 U and $6,250 F 
D) $7,800 F and $6,250 U 
A) $1,500 U and $3,750 U 
B) $1,500 F and $3,750 F 
C) $7,800 U and $6,250 F 
D) $7,800 F and $6,250 U

Question 14

How are costs assigned in a standard cost system?

Accepted Answer

A) actual direct materials, actual direct labour, and budgeted manufacturing overhead 
B) actual direct materials, actual direct labour, and actual manufacturing overhead 
C) standard direct materials, standard direct labour, and standard manufacturing overhead 
D) budgeted direct materials, standard direct labour, and standard manufacturing overhead 
A) actual direct materials, actual direct labour, and budgeted manufacturing overhead 
B) actual direct materials, actual direct labour, and actual manufacturing overhead 
C) standard direct materials, standard direct labour, and standard manufacturing overhead 
D) budgeted direct materials, standard direct labour, and standard manufacturing overhead

Question 15

A favourable price variance occurs whenever the actual prices are greater than the standard prices.

Accepted Answer

A) True 
 B)False

Question 16

Which formula is used to compute standard hours allowed?

Accepted Answer

A) unit labour standard × actual output 
B) unit labour standard × standard output 
C) unit labour standard × actual input 
D) unit labour standard × standard input 
A) unit labour standard × actual output 
B) unit labour standard × standard output 
C) unit labour standard × actual input 
D) unit labour standard × standard input

Question 17

The materials price variance is computed using the actual quantity of materials used,and the materials usage variance is computed using the actual quantity of materials purchased.

Accepted Answer

A) True 
 B)False

Question 18

How are costs assigned in a normal cost system?

Accepted Answer

A) actual direct materials, actual direct labour, and budgeted manufacturing overhead 
B) actual direct materials, actual direct labour, and actual manufacturing overhead 
C) budgeted direct materials, standard direct labour, and standard manufacturing overhead 
D) budgeted direct materials, actual direct labour, and standard manufacturing overhead 
A) actual direct materials, actual direct labour, and budgeted manufacturing overhead 
B) actual direct materials, actual direct labour, and actual manufacturing overhead 
C) budgeted direct materials, standard direct labour, and standard manufacturing overhead 
D) budgeted direct materials, actual direct labour, and standard manufacturing overhead

Question 19

Explain the kaizen approach to costing.

Accepted Answer

Kaizen costing focuses on the continuous

Question 20

Wiltshire Limited produces woollen blankets and clothing.During Year 1,Wiltshire produced 10,000 items of blankets and clothing using 4,250 bundles of wool at a price of $10 per bundle.
The difference between the actual quantity of materials and the standard quantity of materials is due to waste.At the end of Year 1,Wiltshire developed a new process that would cut down on the waste by 60%.By the end of Year 2,the company had actually cut down its waste by 50%.
   A. Identify the kaizen and materials standards in place at the beginning of Year 2. Express
the standards in both physical and financial terms.
B. Calculate the expected cost reduction.
C. Calculate the actual cost reduction.

Accepted Answer

The answer of Wiltshire Limited produces woollen blankets and clothing.During...

Match the variance with its correct calculation. -Actual costs

The quantity of each input that should be used to produce one unit of output is documented on the standard cost sheet.

What results from implementing standard cost systems in manufacturing environments emphasize continuous improvement and just-in-time manufacturing and purchasing?

The standard cost per unit of output for a particular input is calculated by multiplying the standard price per unit by the standard number of units produced.

How are standards developed?

Standard costs are developed for direct materials,direct labour,and variable overhead only.

Match the variance with its correct calculation. -Total materials variance

To compute the standard direct labour hours allowed,multiply the unit labour standard by the standard output.

What do variances indicate?

Which formula is used to calculate the materials price variance?

How are costs assigned in a standard cost system?

A favourable price variance occurs whenever the actual prices are greater than the standard prices.

Which formula is used to compute standard hours allowed?

The materials price variance is computed using the actual quantity of materials used,and the materials usage variance is computed using the actual quantity of materials purchased.

How are costs assigned in a normal cost system?

Explain the kaizen approach to costing.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, production, cash, and Master Budget

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 10: Standard Costing: a Managerial Control Tool

Match the variance with its correct calculation. -Actual costs

The quantity of each input that should be used to produce one unit of output is documented on the standard cost sheet.

What results from implementing standard cost systems in manufacturing environments emphasize continuous improvement and just-in-time manufacturing and purchasing?

The standard cost per unit of output for a particular input is calculated by multiplying the standard price per unit by the standard number of units produced.

How are standards developed?

Standard costs are developed for direct materials,direct labour,and variable overhead only.

Match the variance with its correct calculation. -Total materials variance

To compute the standard direct labour hours allowed,multiply the unit labour standard by the standard output.

What do variances indicate?

Which formula is used to calculate the materials price variance?

How are costs assigned in a standard cost system?

A favourable price variance occurs whenever the actual prices are greater than the standard prices.

Which formula is used to compute standard hours allowed?

The materials price variance is computed using the actual quantity of materials used,and the materials usage variance is computed using the actual quantity of materials purchased.

How are costs assigned in a normal cost system?

Explain the kaizen approach to costing.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, production, cash, and Master Budget

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters