Question 1

If the actual amount of direct materials used in production was less than the standard amount allowed for units produced,there was:

Accepted Answer

A) A favorable materials price variance. 
B) A favorable total materials variance. 
C) A favorable materials quantity variance. 
D) An unfavorable materials quantity variance. 
A) A favorable materials price variance. 
B) A favorable total materials variance. 
C) A favorable materials quantity variance. 
D) An unfavorable materials quantity variance. C

Question 2

Factory overhead variances are usually recorded when:

Accepted Answer

A) Overhead is applied to Work in Process. 
B) Goods are finished and transferred to finished goods inventory. 
C) Goods are sold. 
D) Actual factory overhead costs are incurred. 
A) Overhead is applied to Work in Process. 
B) Goods are finished and transferred to finished goods inventory. 
C) Goods are sold. 
D) Actual factory overhead costs are incurred. A

Question 3

Standard cost systems are generally compatible with job cost systems or with process cost systems.

Accepted Answer

A) True 
 B)False  True

Question 4

Standard cost systems variance computations
Livingston Corporation recently implemented a standard cost system.The company's cost accountant has provided the following data to perform a variance analysis for May:   Compute the following variances.Indicate whether each variance is favorable (F)or unfavorable (U):
(a)Materials price variance: $__________
(b)Materials quantity variance: $__________
(c)Labor rate variance: $__________
(d)Labor efficiency variance: $__________
(e)Overhead spending variance: $__________
(f)Overhead volume variance: $__________

Accepted Answer

(a)$39,000 F (b)$31,

Question 5

Favorable standard cost variances are normally closed at the end of the period by:

Accepted Answer

A) Crediting the variance account and debiting Cost of Goods Sold. 
B) Debiting the variance account and crediting Cost of Goods Sold. 
C) Debiting the variance account and crediting Work in Process. 
D) Crediting the variance account and debiting Work in Process. 
A) Crediting the variance account and debiting Cost of Goods Sold. 
B) Debiting the variance account and crediting Cost of Goods Sold. 
C) Debiting the variance account and crediting Work in Process. 
D) Crediting the variance account and debiting Work in Process.

Question 6

Which statement is true regarding a standard cost system?

Accepted Answer

A) Both actual and standard costs are used. 
B) Only standard costs are used. 
C) If variances occur,then something negative in the operations has occurred. 
D) Standards are used only when actual amounts are not available. 
A) Both actual and standard costs are used. 
B) Only standard costs are used. 
C) If variances occur,then something negative in the operations has occurred. 
D) Standards are used only when actual amounts are not available.

Question 7

The calculation of the labor rate variance is:

Accepted Answer

A) Standard rate multiplied by (standard hours minus actual hours). 
B) Standard hours multiplied by (standard rate minus actual rate). 
C) Actual labor hours multiplied by (standard rate minus actual rate). 
D) Actual rate multiplied by (standard hours minus actual hours). 
A) Standard rate multiplied by (standard hours minus actual hours). 
B) Standard hours multiplied by (standard rate minus actual rate). 
C) Actual labor hours multiplied by (standard rate minus actual rate). 
D) Actual rate multiplied by (standard hours minus actual hours).

Question 8

A favorable materials price variance indicates that actual prices paid in acquiring materials were more than standard prices.

Accepted Answer

A) True 
 B)False

Question 9

Standard costs actually are ideal costs per unit.

Accepted Answer

A) True 
 B)False

Question 10

An unfavorable cost variance will be debited to a cost variance account.

Accepted Answer

A) True 
 B)False

Question 11

If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit,then the materials price variance is:

Accepted Answer

A) $2,850 Favorable. 
B) $1,575 Unfavorable. 
C) $1,275 Favorable. 
D) $2,850 Unfavorable. 
A) $2,850 Favorable. 
B) $1,575 Unfavorable. 
C) $1,275 Favorable. 
D) $2,850 Unfavorable.

Question 12

When standard costs are used in a cost accounting system:

Accepted Answer

A) A favorable cost variance results when standard amounts are less than actual costs. 
B) Cost variances are shown in the year-end balance sheet as assets,if favorable,or as liabilities,if unfavorable. 
C) Costs charged to the Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold accounts are actual costs. 
D) Costs charged to the Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold accounts are at standard costs. 
A) A favorable cost variance results when standard amounts are less than actual costs. 
B) Cost variances are shown in the year-end balance sheet as assets,if favorable,or as liabilities,if unfavorable. 
C) Costs charged to the Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold accounts are actual costs. 
D) Costs charged to the Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold accounts are at standard costs.

Question 13

The calculation of the labor efficiency variance is:

Accepted Answer

A) Standard hourly rate multiplied by (standard hours minus actual hours). 
B) Standard hours multiplied by (standard rate minus actual rate). 
C) Actual labor hours multiplied by (standard rate minus actual rate). 
D) Actual rate multiplied by (standard hours minus actual hours). 
A) Standard hourly rate multiplied by (standard hours minus actual hours). 
B) Standard hours multiplied by (standard rate minus actual rate). 
C) Actual labor hours multiplied by (standard rate minus actual rate). 
D) Actual rate multiplied by (standard hours minus actual hours).

Question 14

If the hourly wage rate actually paid during January is higher than the standard rate,the result is:

Accepted Answer

A) An unfavorable labor rate variance. 
B) A favorable labor rate variance. 
C) An unfavorable labor efficiency variance. 
D) A favorable total labor variance. 
A) An unfavorable labor rate variance. 
B) A favorable labor rate variance. 
C) An unfavorable labor efficiency variance. 
D) A favorable total labor variance.

Question 15

A standard cost is the per-unit cost incurred under:

Accepted Answer

A) Ideal operating conditions. 
B) Perfect operating conditions. 
C) Normal,but efficient operating conditions. 
D) Minimally acceptable operating conditions. 
A) Ideal operating conditions. 
B) Perfect operating conditions. 
C) Normal,but efficient operating conditions. 
D) Minimally acceptable operating conditions.

Question 16

A materials quantity variance is the standard price times standard quantity,less actual quantity.

Accepted Answer

A) True 
 B)False

Question 17

Dawson Company has a union contract which calls for an 8% cost of living increase in the wages paid to all factory workers as of July 1 of the current year.This suggests that:

Accepted Answer

A) The labor rate variance for July will be unfavorable. 
B) The labor rate variances during the first half of the current year have been favorable. 
C) The standard labor cost per unit should be revised as of July 1. 
D) The labor efficiency variance for July will be unfavorable. 
A) The labor rate variance for July will be unfavorable. 
B) The labor rate variances during the first half of the current year have been favorable. 
C) The standard labor cost per unit should be revised as of July 1. 
D) The labor efficiency variance for July will be unfavorable.

Question 18

The total overhead variance is the difference between:

Accepted Answer

A) Budgeted overhead and applied overhead. 
B) Actual overhead and budgeted overhead. 
C) Actual overhead and applied overhead. 
D) Applied overhead and budgeted overhead. 
A) Budgeted overhead and applied overhead. 
B) Actual overhead and budgeted overhead. 
C) Actual overhead and applied overhead. 
D) Applied overhead and budgeted overhead.

Question 19

If actual direct labor cost was $7,560 and standard labor cost was $7,000,the journal entry to record this would include:

Accepted Answer

A) A credit to the labor rate variance account of $560 and a credit to Direct Labor of $7,000. 
B) A debit to the labor rate variance account of $560 and a debit to Direct Labor of $7,000. 
C) A credit to the labor rate variance account of $560 and a debit to Direct Labor of $7,560. 
D) A debit to the labor rate variance account of $560 and a credit to Direct Labor of $7,560. 
A) A credit to the labor rate variance account of $560 and a credit to Direct Labor of $7,000. 
B) A debit to the labor rate variance account of $560 and a debit to Direct Labor of $7,000. 
C) A credit to the labor rate variance account of $560 and a debit to Direct Labor of $7,560. 
D) A debit to the labor rate variance account of $560 and a credit to Direct Labor of $7,560.

Question 20

The overhead spending variance:

Accepted Answer

A) Occurs automatically whenever actual production levels differ from the "normal" production level used to compute the standard overhead cost per unit. 
B) Is the difference between amounts spent for actual manufacturing overhead costs and the amount applied to production. 
C) Is computed as the difference between variable overhead per the flexible budget and actual variable overhead costs incurred. 
D) Is the portion of the total overhead variance that is considered "controllable" by the production manager. 
A) Occurs automatically whenever actual production levels differ from the "normal" production level used to compute the standard overhead cost per unit. 
B) Is the difference between amounts spent for actual manufacturing overhead costs and the amount applied to production. 
C) Is computed as the difference between variable overhead per the flexible budget and actual variable overhead costs incurred. 
D) Is the portion of the total overhead variance that is considered "controllable" by the production manager.

Exam 24: Standard Cost Systems

If the actual amount of direct materials used in production was less than the standard amount allowed for units produced,there was:

Factory overhead variances are usually recorded when:

Standard cost systems are generally compatible with job cost systems or with process cost systems.

Favorable standard cost variances are normally closed at the end of the period by:

Which statement is true regarding a standard cost system?

The calculation of the labor rate variance is:

A favorable materials price variance indicates that actual prices paid in acquiring materials were more than standard prices.

Standard costs actually are ideal costs per unit.

An unfavorable cost variance will be debited to a cost variance account.

If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit,then the materials price variance is:

When standard costs are used in a cost accounting system:

The calculation of the labor efficiency variance is:

If the hourly wage rate actually paid during January is higher than the standard rate,the result is:

A standard cost is the per-unit cost incurred under:

A materials quantity variance is the standard price times standard quantity,less actual quantity.

Dawson Company has a union contract which calls for an 8% cost of living increase in the wages paid to all factory workers as of July 1 of the current year.This suggests that:

The total overhead variance is the difference between:

If actual direct labor cost was $7,560 and standard labor cost was $7,000,the journal entry to record this would include:

The overhead spending variance:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values

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