Question 1

Standard costs are typically reviewed once per year.

Accepted Answer

A) True 
 B)False

Question 2

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 quantity 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 3

Greenleaf's flexible budget for June,based on actual output,called for the use of 10,000 square feet of materials at a standard cost of $9.90 per square foot.Company records show that the actual price paid for the materials used in June was $9.70 per square foot,and that the direct materials price variance for the month was $2,090 favorable.The materials quantity variance for Greenleaf's June operations was:

Accepted Answer

A) $1,000 favorable. 
B) $4,455 unfavorable. 
C) $4,365 favorable. 
D) Impossible to determine from the data given. 
A) $1,000 favorable. 
B) $4,455 unfavorable. 
C) $4,365 favorable. 
D) Impossible to determine from the data given.

Question 4

An unfavorable labor efficiency variance is most likely to occur if:

Accepted Answer

A) Employees are paid at an overtime wage rate. 
B) Employees are inefficient and units must be reworked. 
C) Labor cost per unit exceeds materials costs per unit. 
D) Employee turnover rates are low. 
A) Employees are paid at an overtime wage rate. 
B) Employees are inefficient and units must be reworked. 
C) Labor cost per unit exceeds materials costs per unit. 
D) Employee turnover rates are low.

Question 5

Standard costs:

Accepted Answer

A) May be used in job order cost systems but not in process cost accounting systems. 
B) Should be revised upward when actual costs are higher than expected because of waste and inefficiency. 
C) Are the same for all companies in a given industry. 
D) Are the costs that should be incurred to produce a product under normal conditions. 
A) May be used in job order cost systems but not in process cost accounting systems. 
B) Should be revised upward when actual costs are higher than expected because of waste and inefficiency. 
C) Are the same for all companies in a given industry. 
D) Are the costs that should be incurred to produce a product under normal conditions.

Question 6

Standard cost system materials variances
Levron Corporation manufactures a line of cosmetics.The standard price of the ingredients in its beauty cream is $7 per ounce; the standard amount of material allowed per jar is 1.25 ounces.During December,5,300 jars were produced,requiring 6,784 ounces of ingredients at a total direct materials cost of $37,312.
(a)Calculate the materials price variance for December.Indicate whether it is favorable (F)or unfavorable (U).$__________
(b)Who is responsible for this variance? _________
(c)Calculate the materials quantity variance for December.Indicate whether it is favorable (F)or unfavorable (U).$__________
(d)What is Levron Corporation's total materials variance for December? Indicate whether it is favorable (F)or unfavorable (U).$__________

Accepted Answer

(a)$10,176 F (b)purc

Question 7

The presence of fixed costs in manufacturing overhead causes the actual amount of manufacturing overhead per unit of output to vary,depending on the actual production volume attained.

Accepted Answer

A) True 
 B)False

Question 8

Standard costs are established only for direct labor and direct materials.

Accepted Answer

A) True 
 B)False

Question 9

In a standard cost system,finished goods are reported in:

Accepted Answer

A) The balance sheet at standard cost. 
B) The balance sheet at actual cost. 
C) The income statement at standard cost. 
D) The income statement at actual cost. 
A) The balance sheet at standard cost. 
B) The balance sheet at actual cost. 
C) The income statement at standard cost. 
D) The income statement at actual cost.

Question 10

A standard cost is the per unit cost actually incurred under normal operating conditions.

Accepted Answer

A) True 
 B)False

Question 11

Controlling the materials quantity variance is usually the responsibility of:

Accepted Answer

A) The cost accountant. 
B) The purchasing agent. 
C) The marketing director. 
D) The production supervisor. 
A) The cost accountant. 
B) The purchasing agent. 
C) The marketing director. 
D) The production supervisor.

Question 12

In setting standards,management's level of performance expectation must be something less than ideal.

Accepted Answer

A) True 
 B)False

Question 13

Excessive overtime hours worked by direct labor workers often results in:

Accepted Answer

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

Question 14

A total cost variance for materials can be caused by differences in the quantity used,or in the price paid,but not by both.

Accepted Answer

A) True 
 B)False

Question 15

Establishing standard cost amounts
Explain why the determination of standard cost amounts should not be the sole responsibility of a company's cost accountant.

Accepted Answer

Standard cost systems are influenced by

Question 16

Standard cost system-using variance data
During its first month of operations,the Beech Company charged Work in Process Inventory with $40,000 of direct materials,$46,000 of direct labor costs,and $80,000 of manufacturing overhead costs.Beech Company uses a standard cost system,and the variances at the end of this first month are as follows:   (a)Compute the actual cost of direct materials placed into production during the month.$_______________
(b)Compute the actual cost of direct labor hours worked during this month.$_______________
(c)Compute the actual cost of manufacturing overhead for this month.$_______________
(d)Assume that the balance in the Work in Process account is $6,000 at the end of this first month.If total standard unit cost is $20 per unit,the number of units completed during this month and transferred to Finished Goods Inventory is _______________ units.

Accepted Answer

The answer of Standard cost system-using variance data
During its first...

Question 17

In setting standard costs,management's expectations are that the standard costs will always be met.

Accepted Answer

A) True 
 B)False

Question 18

The company's CEO is the only person who analyzes costs variances.

Accepted Answer

A) True 
 B)False

Question 19

A variance is said to be unfavorable when actual costs exceed standard costs.

Accepted Answer

A) True 
 B)False

Question 20

The use of excessive quantities of material in manufacturing a product causes an unfavorable materials quantity variance.

Accepted Answer

A) True 
 B)False

Exam 24: Standard Cost Systems

Standard costs are typically reviewed once per year.

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 quantity variance is:

An unfavorable labor efficiency variance is most likely to occur if:

Standard costs:

The presence of fixed costs in manufacturing overhead causes the actual amount of manufacturing overhead per unit of output to vary,depending on the actual production volume attained.

Standard costs are established only for direct labor and direct materials.

In a standard cost system,finished goods are reported in:

A standard cost is the per unit cost actually incurred under normal operating conditions.

Controlling the materials quantity variance is usually the responsibility of:

In setting standards,management's level of performance expectation must be something less than ideal.

Excessive overtime hours worked by direct labor workers often results in:

A total cost variance for materials can be caused by differences in the quantity used,or in the price paid,but not by both.

Establishing standard cost amounts Explain why the determination of standard cost amounts should not be the sole responsibility of a company's cost accountant.

In setting standard costs,management's expectations are that the standard costs will always be met.

The company's CEO is the only person who analyzes costs variances.

A variance is said to be unfavorable when actual costs exceed standard costs.

The use of excessive quantities of material in manufacturing a product causes an unfavorable materials quantity 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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