Question 1

If the actual cost per pound of direct material is less than the standard cost per pound,there is:

Accepted Answer

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

Question 2

A difference between a standard cost and an actual cost would be recorded in the Work in Process account.

Accepted Answer

A) True 
 B)False

Question 3

Overhead volume variances indicate:

Accepted Answer

A) Efficient performance. 
B) Inefficient performance. 
C) Fluctuations in the level of production from month to month. 
D) Inadequate budgeting. 
A) Efficient performance. 
B) Inefficient performance. 
C) Fluctuations in the level of production from month to month. 
D) Inadequate budgeting.

Question 4

Which of the following is not an advantage of using a standard cost system?

Accepted Answer

A) It eliminates the need for analysis of variances. 
B) It facilitates establishing an effective system of responsibility accounting. 
C) It requires an analysis of all aspects of operations. 
D) It helps management control costs. 
A) It eliminates the need for analysis of variances. 
B) It facilitates establishing an effective system of responsibility accounting. 
C) It requires an analysis of all aspects of operations. 
D) It helps management control costs.

Question 5

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 journal entry to record the cost of materials used includes:

Accepted Answer

A) A debit to Work in Process Inventory of $11,400. 
B) A debit to Work in Process Inventory of $12,675. 
C) A debit to Materials Price variance of $2,850. 
D) A credit to Materials Price variance of $1,575. 
A) A debit to Work in Process Inventory of $11,400. 
B) A debit to Work in Process Inventory of $12,675. 
C) A debit to Materials Price variance of $2,850. 
D) A credit to Materials Price variance of $1,575.

Question 6

External auditors are often called upon to evaluate cost variances.

Accepted Answer

A) True 
 B)False

Question 7

Standard cost system overhead variances
Rogers Manufacturing produces a component part used throughout the computer industry.Variable overhead is allocated to production at a rate of $5 per unit.The company's monthly fixed overhead costs average $30,000.Normal output levels average 40,000 units per month.During April,Rogers produced 50,000 units and incurred actual overhead costs of $280,000.
(a)Total overhead applied to production in April amounted to $__________.
(b)Total overhead budgeted in April for the level of output achieved amounted to $__________.
(c)April's overhead spending variance was $__________ (favorable/unfavorable).
(d)April's overhead volume variance was $__________ (favorable/unfavorable).
(e)For which of Rogers' two overhead variances is the production manager held responsible?

Accepted Answer

(a)$287,500 (b)$280,

Question 8

Standard cost system-materials and labor variances
Job no.811 involved the production of 200 units of product MF.The total standard and actual costs for materials and direct labor on this job are shown below:   Compute the following cost variances for job no.811.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: $_______________

Accepted Answer

The answer of Standard cost system-materials and labor variances
Job no.811...

Question 9

In a standard cost system actual costs are recorded in Material,Direct Labor,and Overhead accounts,but standard costs are charged to Work in Process.

Accepted Answer

A) True 
 B)False

Question 10

Volume variances
Consider the following statement: "No manager should be held responsible for a volume variance." Briefly explain why a volume variance should not be investigated and viewed as the responsibility of some manager in an organization.

Accepted Answer

As long as the production departments of

Question 11

Standard cost system labor variance
The following computations of March labor variances for Sam's Supply Company are incomplete.The missing items are labeled (a)through (d).If necessary,round your answers.
Labor rate variance = 4,800 hours × [(a)- $8.50] = $350 favorable
Labor efficiency variance = (b)× [5,000 hours - (c)] = $(d)
On the appropriately labeled line,identify each missing item by name (a through c)and show the missing value (a through d).Show supporting computations in the space provided.
(a)_________________________ $_______________
(b)_________________________ $_______________
(c)_______________________________ hours
(d)$______________ F or U (Circle the correct term.)
(e)During March,the supervisor left for vacation without arranging for a replacement.Which variances would have been most affected by this situation? _________________________
Computations

Accepted Answer

(a)Standard rate: $8.57 (b)Sta

Question 12

The use of inexpensive,low quality,materials often results in:

Accepted Answer

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

Question 13

A labor efficiency variance relates to the number of hours actually worked,compared to the standard hours.

Accepted Answer

A) True 
 B)False

Question 14

A large favorable variance from standard costs at the end of the year should be:

Accepted Answer

A) Carried forward to the next fiscal year. 
B) Shown as other income in the income statement. 
C) Added to cost of goods sold in the income statement. 
D) Allocated between ending inventories and cost of goods sold. 
A) Carried forward to the next fiscal year. 
B) Shown as other income in the income statement. 
C) Added to cost of goods sold in the income statement. 
D) Allocated between ending inventories and cost of goods sold.

Question 15

In a system designed to measure cost variances,goods transferred from the Work in Process account to the Finished Goods Inventory are valued at:

Accepted Answer

A) Actual cost. 
B) Market value. 
C) Standard cost. 
D) The lower of actual cost or market value. 
A) Actual cost. 
B) Market value. 
C) Standard cost. 
D) The lower of actual cost or market value.

Question 16

A favorable variance would be credited to a cost variance account.

Accepted Answer

A) True 
 B)False

Question 17

Standard costs
Define standard costs.Under what conditions should previously established standard costs be revised?

Accepted Answer

Standard costs are predetermined estimat

Question 18

An important advantage of a standard cost system is that standard costs:

Accepted Answer

A) Cause financial statements to be more comparable because different companies cost their inventories in the same manner. 
B) Can be determined with great precision so that inventories are valued with complete accuracy. 
C) Cause a lower net income,resulting in lower income taxes. 
D) Focus attention on trouble spots and facilitate prompt corrective action. 
A) Cause financial statements to be more comparable because different companies cost their inventories in the same manner. 
B) Can be determined with great precision so that inventories are valued with complete accuracy. 
C) Cause a lower net income,resulting in lower income taxes. 
D) Focus attention on trouble spots and facilitate prompt corrective action.

Question 19

There will be a favorable materials price variance if:

Accepted Answer

A) The standard price per unit is less than the actual price per unit. 
B) The standard price per unit is greater than the actual price per unit. 
C) The actual quantity purchased is greater than expected. 
D) The actual quantity purchased is less than expected. 
A) The standard price per unit is less than the actual price per unit. 
B) The standard price per unit is greater than the actual price per unit. 
C) The actual quantity purchased is greater than expected. 
D) The actual quantity purchased is less than expected.

Question 20

Caesar,Inc.purchased and used 47,600 pounds of goods to produce an actual quantity of 15,300 units.Each unit required 3 pounds of goods.The quantity variance was $10,200 unfavorable and the price variance was $7,140 unfavorable.What was the actual price and the standard price per pound?

Accepted Answer

The actual quantity

Exam 24: Standard Cost Systems

If the actual cost per pound of direct material is less than the standard cost per pound,there is:

A difference between a standard cost and an actual cost would be recorded in the Work in Process account.

Overhead volume variances indicate:

Which of the following is not an advantage of using a standard cost system?

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 journal entry to record the cost of materials used includes:

External auditors are often called upon to evaluate cost variances.

In a standard cost system actual costs are recorded in Material,Direct Labor,and Overhead accounts,but standard costs are charged to Work in Process.

Volume variances Consider the following statement: "No manager should be held responsible for a volume variance." Briefly explain why a volume variance should not be investigated and viewed as the responsibility of some manager in an organization.

The use of inexpensive,low quality,materials often results in:

A labor efficiency variance relates to the number of hours actually worked,compared to the standard hours.

A large favorable variance from standard costs at the end of the year should be:

In a system designed to measure cost variances,goods transferred from the Work in Process account to the Finished Goods Inventory are valued at:

A favorable variance would be credited to a cost variance account.

Standard costs Define standard costs.Under what conditions should previously established standard costs be revised?

An important advantage of a standard cost system is that standard costs:

There will be a favorable materials price variance if:

Caesar,Inc.purchased and used 47,600 pounds of goods to produce an actual quantity of 15,300 units.Each unit required 3 pounds of goods.The quantity variance was $10,200 unfavorable and the price variance was $7,140 unfavorable.What was the actual price and the standard price per pound?

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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