Exam 24: Standard Cost Systems

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 total materials cost variance is:

A spending variance results from incurring more overhead costs than allowed for the actual level of activity achieved.

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

The purchasing manager is often included in evaluating cost variances.

A supervisor's salary is an example of:

In most companies using standard cost procedures,the costs charged to Work in Process,Finished Goods,and Cost of Goods Sold are the actual costs,not the standard costs.

Using more direct labor hours for units produced than the amount allowed by the standard results in:

A favorable variance occurs when actual costs are less than standard costs.

A good standard cost system should always generate unfavorable variances.

The level of production plays an important role in determining cost standards.

Accounting terminology Listed below are seven technical accounting terms introduced or emphasized in this chapter: Each of the following statements may (or may not)describe one of these technical terms.In the space provided beside each statement,indicate the accounting term described,or answer "None" if the statement does not correctly describe any of the terms. ____ (a)A materials variance which is the responsibility of the Purchasing Department. ____ (b)The variance which exists whenever actual production levels differ from normal levels. ____ (c)Unit costs expected to be incurred under normal conditions. ____ (d)A labor variance caused by a difference between standard and actual hours required to complete a task. ____ (e)The variance caused by incurring more overhead costs than allowed for at a given level of production.