Question 1

While setting standards, the managers should never allow for spoilage or machine breakdowns in their calculations.

Accepted Answer

A) True 
 B)False  False

Question 2

The use of standards for nonmanufacturing expenses is:

Accepted Answer

A)  not as common as it is for manufacturing costs 
B)  as common as it is for manufacturing costs 
C)  not useful 
D)  impossible 
A)  not as common as it is for manufacturing costs 
B)  as common as it is for manufacturing costs 
C)  not useful 
D)  impossible A

Question 3

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:   The amount of the factory overhead volume variance is:

Accepted Answer

A)  $2,000 favorable 
B)  $2,000 unfavorable 
C)  $2,500 unfavorable 
D)  $0 
A)  $2,000 favorable 
B)  $2,000 unfavorable 
C)  $2,500 unfavorable 
D)  $0 B

Question 4

A company records their inventory purchases at standard cost but also records purchase price variances. The company purchased 5,000 widgets $8.00. The standard cost for the widgets is $7.60. Which of the following would be included in the journal entry?

Accepted Answer

A)  $38,000 Debit to Accounts Payable 
B)  $ 2,000 Credit to Direct Materials Price Variance 
C)  $ 2,000 Debit to Accounts Payable 
D)  $ 2,000 Debit to Direct Materials Price Variance 
A)  $38,000 Debit to Accounts Payable 
B)  $ 2,000 Credit to Direct Materials Price Variance 
C)  $ 2,000 Debit to Accounts Payable 
D)  $ 2,000 Debit to Direct Materials Price Variance

Question 5

Ruby Company produces a chair that requires 5 yds. of material per unit. The standard price of one yard of material is $7.60. During the month, 8,500 chairs were manufactured, using 40,000 yards at a cost of $7.50. Determine the (a) price variance, (b) quantity variance, and (c) cost variance.

Accepted Answer

(a) Price variance = ($7.60 -

Question 6

Calculate the Direct Materials Price variance using the above information:

Accepted Answer

A)  $1,795.50 Favorable 
B)  $378.00 Favorable 
C)  $4,512.50 Unfavorable 
D)  $378.00 Unfavorable 
A)  $1,795.50 Favorable 
B)  $378.00 Favorable 
C)  $4,512.50 Unfavorable 
D)  $378.00 Unfavorable

Question 7

Standard costs serve as a device for measuring efficiency.

Accepted Answer

A) True 
 B)False

Question 8

Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits for using standard costs?

Accepted Answer

A)  Used to indicate where changes in technology and machinery need to be made. 
B)  Used to identify inventory 
C)  Used to plan direct materials, direct labor, and factory factory overhead. 
D)  Used to control costs. 
A)  Used to indicate where changes in technology and machinery need to be made. 
B)  Used to identify inventory 
C)  Used to plan direct materials, direct labor, and factory factory overhead. 
D)  Used to control costs.

Question 9

An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.

Accepted Answer

A) True 
 B)False

Question 10

Calculate the Direct Labor Time Variance using the above information

Accepted Answer

A)  $2,362.50 Favorable 
B)  $2,362,50 Unfavorable 
C)  $6,540.00 Favorable 
D)  $6,540.00 Unfavorable 
A)  $2,362.50 Favorable 
B)  $2,362,50 Unfavorable 
C)  $6,540.00 Favorable 
D)  $6,540.00 Unfavorable

Question 11

If employees are given bonuses for exceeding normal standards, the standards may be very effective in motivating employees.

Accepted Answer

A) True 
 B)False

Question 12

Currently attainable standards do not allow for reasonable production difficulties.

Accepted Answer

A) True 
 B)False

Question 13

A company should only use nonfinancial performance measures when financial measures cannot be calculated.

Accepted Answer

A) True 
 B)False

Question 14

Calculate the Total Direct Labor Variance using the above information

Accepted Answer

A)  $2,051.25 Favorable 
B)  $2,051.25 Unfavorable 
C)  $2,362.50 Unfavorable 
D)  $2,362.50 Favorable 
A)  $2,051.25 Favorable 
B)  $2,051.25 Unfavorable 
C)  $2,362.50 Unfavorable 
D)  $2,362.50 Favorable

Question 15

Which of the following would not lend itself to applying direct labor variances?

Accepted Answer

A)  Help desk 
B)  Research and development scientist 
C)  Customer service personnel 
D)  Telemarketer 
A)  Help desk 
B)  Research and development scientist 
C)  Customer service personnel 
D)  Telemarketer

Question 16

Standard costs are a useful management tool that can be used solely as a statistical device apart from the ledger or they can be incorporated in the accounts.

Accepted Answer

A) True 
 B)False

Question 17

Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.

Accepted Answer

A) True 
 B)False

Question 18

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows:   What is the amount of the factory overhead volume variance?

Accepted Answer

A)  $12,000 unfavorable 
B)  $12,000 favorable 
C)  $14,000 unfavorable 
D)  $26,000 unfavorable 
A)  $12,000 unfavorable 
B)  $12,000 favorable 
C)  $14,000 unfavorable 
D)  $26,000 unfavorable

Question 19

A company must choice either a standard system or nonfinancial performance measures to evaluate the performance of a company.

Accepted Answer

A) True 
 B)False

Question 20

Since the controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable.

Accepted Answer

A) True 
 B)False

Exam 23: Performance Evaluation Using Variances From Standard Costs

While setting standards, the managers should never allow for spoilage or machine breakdowns in their calculations.

The use of standards for nonmanufacturing expenses is:

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: The amount of the factory overhead volume variance is:

A company records their inventory purchases at standard cost but also records purchase price variances. The company purchased 5,000 widgets $8.00. The standard cost for the widgets is $7.60. Which of the following would be included in the journal entry?

Ruby Company produces a chair that requires 5 yds. of material per unit. The standard price of one yard of material is $7.60. During the month, 8,500 chairs were manufactured, using 40,000 yards at a cost of $7.50. Determine the (a) price variance, (b) quantity variance, and (c) cost variance.

Calculate the Direct Materials Price variance using the above information:

Standard costs serve as a device for measuring efficiency.

Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits for using standard costs?

An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.

Calculate the Direct Labor Time Variance using the above information

If employees are given bonuses for exceeding normal standards, the standards may be very effective in motivating employees.

Currently attainable standards do not allow for reasonable production difficulties.

A company should only use nonfinancial performance measures when financial measures cannot be calculated.

Calculate the Total Direct Labor Variance using the above information

Which of the following would not lend itself to applying direct labor variances?

Standard costs are a useful management tool that can be used solely as a statistical device apart from the ledger or they can be incorporated in the accounts.

Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.

A company must choice either a standard system or nonfinancial performance measures to evaluate the performance of a company.

Since the controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Filters