Question 1

A labour rate variance is shown by

Accepted Answer

A)  AH (AR - SR). 
B)  (AH - SH), 
C)  (AH - SH) (AR - SR), 
D)  AR (AH - SH), 
A)  AH (AR - SR). 
B)  (AH - SH), 
C)  (AH - SH) (AR - SR), 
D)  AR (AH - SH), A

Question 2

Which of the following statements is a definition of standard quantity of direct materials allowed for a period? Standard quantity of direct materials is

Accepted Answer

A)  the number of units of material that should have been used for expected (budgeted) production. 
B)  the number of units of material that were used for actual production. 
C)  the number of units of material that should have been used for actual production. 
D)  the number of units of material required for each unit of production. 
A)  the number of units of material that should have been used for expected (budgeted) production. 
B)  the number of units of material that were used for actual production. 
C)  the number of units of material that should have been used for actual production. 
D)  the number of units of material required for each unit of production. C

Question 3

Flexer Company Ltd has set the following standards for the production of one unit of product. Normal production each month is 500 units.  
During June, actual production amounted to 420 units. All direct material was purchased and used this month. Actual cost amounted to:  
Determine the direct labour efficiency variance for June production.

Accepted Answer

A)  $452 (U) 
B)  $172 (U) 
C)  $280 (U) 
D)  $284 (F) 
A)  $452 (U) 
B)  $172 (U) 
C)  $280 (U) 
D)  $284 (F) C

Question 4

Jasmine Morron is examining a statistical control chart on the recent cost report of her manufacturing company. Jasmine is focusing on one specific process, the labour efficiency variance of polishing. She determines that the critical values for this process are $1000. Which of the following statements is correct?

Accepted Answer

A)  Jasmine should investigate only unfavourable variances that are larger than $1000. 
B)  Any variances of less than $1000 are likely to be the result of random events. 
C)  Jasmine should investigate unfavourable variances of any size, and favourable variances that are larger than $1000. 
D)  Jasmine should investigate any variances that are larger than $500. 
A)  Jasmine should investigate only unfavourable variances that are larger than $1000. 
B)  Any variances of less than $1000 are likely to be the result of random events. 
C)  Jasmine should investigate unfavourable variances of any size, and favourable variances that are larger than $1000. 
D)  Jasmine should investigate any variances that are larger than $500.

Question 5

A particular firm with zero material inventory purchased 30 000 kg of material and used 25 000 kg. For control purposes, it is recommended that firms calculate the material price variance at the time of purchase. The variance could alternatively be calculated at the time of usage of that material. Which of the following statements most correctly reflects a comparison of the two methods for this firm?

Accepted Answer

A)  Whether calculated on purchase or usage, both variances will be favourable. 
B)  Whether calculated on purchase or usage, both variances will be unfavourable. 
C)  The variance calculated on purchase will be larger than the variance calculated on usage, but in the same direction (favourable/unfavourable). 
D)  The variance calculated on purchase will be smaller than the variance calculated on usage, but in the same direction (favourable/unfavourable). 
A)  Whether calculated on purchase or usage, both variances will be favourable. 
B)  Whether calculated on purchase or usage, both variances will be unfavourable. 
C)  The variance calculated on purchase will be larger than the variance calculated on usage, but in the same direction (favourable/unfavourable). 
D)  The variance calculated on purchase will be smaller than the variance calculated on usage, but in the same direction (favourable/unfavourable).

Question 6

Cost flow: standard system versus normal system
How does the flow of costs in a standard cost system differ from the flow in a normal cost system?

Accepted Answer

In a standard cost system, the entries i

Question 7

Legacy Company Ltd has determined that 1 unit of its product requires 1.5 hours of direct labour in the assembly department and 1 hour in the finishing department. Assemblers are paid $8.00 per hour and finishers are paid $9.00 per hour. Determine the standard labour cost of one unit.

Accepted Answer

A)  $22.50 
B)  $17.00 
C)  $20.00 
D)  $21.00 
A)  $22.50 
B)  $17.00 
C)  $20.00 
D)  $21.00

Question 8

Twister Pty Ltd has set direct labour standards of 3 hours per unit and $5 per hour. During the month 2900 hours at a total cost of $17 400 were used to produce 1000 units. Determine the total direct labour variance.

Accepted Answer

A)  $2400 (F) 
B)  $2900 (F) 
C)  $2900 (U) 
D)  $2400 (U) 
A)  $2400 (F) 
B)  $2900 (F) 
C)  $2900 (U) 
D)  $2400 (U)

Question 9

Management by exception is best defined as

Accepted Answer

A)  controlling actions of subordinates through acceptance by them of management techniques. 
B)  investigating unfavourable variances. 
C)  devoting management time to follow up only on significant variances. 
D)  controlling costs so that non-zero variances are quite exceptional. 
A)  controlling actions of subordinates through acceptance by them of management techniques. 
B)  investigating unfavourable variances. 
C)  devoting management time to follow up only on significant variances. 
D)  controlling costs so that non-zero variances are quite exceptional.

Question 10

When material price variances are recognised at the time of material purchase, direct materials used are

Accepted Answer

A)  credited to the materials account at standard cost. 
B)  debited to the work in process account at actual prices. 
C)  credited to the materials account at actual cost. 
D)  debited to the materials account at standard cost. 
A)  credited to the materials account at standard cost. 
B)  debited to the work in process account at actual prices. 
C)  credited to the materials account at actual cost. 
D)  debited to the materials account at standard cost.

Question 11

Which of the following statements is false concerning the two ways to set standards?

Accepted Answer

A)  Time and motion studies are part of the task analysis method. 
B)  The usefulness of the historical data analysis method is reduced by changes in production methods. 
C)  The task analysis method is future oriented rather than past oriented. 
D)  The task analysis method and the analysis of historical data method cannot be used together. 
A)  Time and motion studies are part of the task analysis method. 
B)  The usefulness of the historical data analysis method is reduced by changes in production methods. 
C)  The task analysis method is future oriented rather than past oriented. 
D)  The task analysis method and the analysis of historical data method cannot be used together.

Question 12

Standard costs can be used for

Accepted Answer

A)  controlling costs and products. 
B)  controlling budgets and products. 
C)  control and products. 
D)  control and product costing. 
A)  controlling costs and products. 
B)  controlling budgets and products. 
C)  control and products. 
D)  control and product costing.

Question 13

When investigating variances, management are more likely to investigate those costs that are uncontrollable.

Accepted Answer

A) True 
 B)False

Question 14

The manager generally responsible for the direct material price variance is the

Accepted Answer

A)  sales manager. 
B)  production supervisor. 
C)  purchasing manager. 
D)  personnel manager. 
A)  sales manager. 
B)  production supervisor. 
C)  purchasing manager. 
D)  personnel manager.

Question 15

Which of the following statements is true with regard to variances requiring investigation?
i. Favourable variances do not need to be investigated.
ii. Large variances should be investigated.
iii. Consistent trends in variances should be investigated.

Accepted Answer

A)  i 
B)  ii 
C)  i and ii 
D)  ii and iii 
A)  i 
B)  ii 
C)  i and ii 
D)  ii and iii

Question 16

As production takes place, the product costs are added to the

Accepted Answer

A)  raw materials inventory account. 
B)  work in process inventory account. 
C)  finished goods inventory account. 
D)  cost of goods sold account. 
A)  raw materials inventory account. 
B)  work in process inventory account. 
C)  finished goods inventory account. 
D)  cost of goods sold account.

Question 17

The following data relates to QA firm.
Cost standards:  
Actual results:
7800 units were produced.  
Calculate the labour efficiency variance.

Accepted Answer

A)  $8000 (F) 
B)  $8000 (U) 
C)  $8250 (U) 
D)  $8250 (F) 
A)  $8000 (F) 
B)  $8000 (U) 
C)  $8250 (U) 
D)  $8250 (F)

Question 18

When a manager receives a bonus based on meeting the standards and achieving increased efficiencies which of the following could be an undesired outcome?

Accepted Answer

A)  Increased profit 
B)  Satisfied customers 
C)  Reduced employee theft 
D)  Lower quality raw materials 
A)  Increased profit 
B)  Satisfied customers 
C)  Reduced employee theft 
D)  Lower quality raw materials

Question 19

Dexter Surgical Tools has set the following perfection direct labour standard: 0.5 hours at $20 per hour, for each unit of Tool #11. The company plans to produce 1200 units of Tool #11 in July; however, the actual production was 1000 units and only 900 units were actually sold. The actual labour cost for July was $22 per hour.
If Dexter Surgical Tools decides to use a practical standard instead of the perfection standard, the labour efficiency variance is likely to

Accepted Answer

A)  remain unchanged. 
B)  increase. 
C)  decrease. 
D)  not enough information. 
A)  remain unchanged. 
B)  increase. 
C)  decrease. 
D)  not enough information.

Question 20

Dexter Surgical Tools has set the following direct labour standard: 0.5 hours at $20 per hour, for each unit of Tool #11. The company plans to produce 1200 units of Tool #11 in July; however, the actual production was 1000 units and only 900 units were actually sold. The actual labour cost for July was $22 per hour.
The labour efficiency variance for July was

Accepted Answer

A)  $1200 Favourable. 
B)  $1200 Unfavourable. 
C)  $1000 Favourable. 
D)  $1000 Unfavourable. 
A)  $1200 Favourable. 
B)  $1200 Unfavourable. 
C)  $1000 Favourable. 
D)  $1000 Unfavourable.

A labour rate variance is shown by

Which of the following statements is a definition of standard quantity of direct materials allowed for a period? Standard quantity of direct materials is

Cost flow: standard system versus normal system How does the flow of costs in a standard cost system differ from the flow in a normal cost system?

Legacy Company Ltd has determined that 1 unit of its product requires 1.5 hours of direct labour in the assembly department and 1 hour in the finishing department. Assemblers are paid $8.00 per hour and finishers are paid $9.00 per hour. Determine the standard labour cost of one unit.

Twister Pty Ltd has set direct labour standards of 3 hours per unit and $5 per hour. During the month 2900 hours at a total cost of $17 400 were used to produce 1000 units. Determine the total direct labour variance.

Management by exception is best defined as

When material price variances are recognised at the time of material purchase, direct materials used are

Which of the following statements is false concerning the two ways to set standards?

Standard costs can be used for

When investigating variances, management are more likely to investigate those costs that are uncontrollable.

The manager generally responsible for the direct material price variance is the

Which of the following statements is true with regard to variances requiring investigation? i. Favourable variances do not need to be investigated. ii. Large variances should be investigated. iii. Consistent trends in variances should be investigated.

As production takes place, the product costs are added to the

The following data relates to QA firm. Cost standards: Actual results: 7800 units were produced. Calculate the labour efficiency variance.

When a manager receives a bonus based on meeting the standards and achieving increased efficiencies which of the following could be an undesired outcome?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters

Exam 10: Standard Costs for Control: Direct Material and Direct Labour

A labour rate variance is shown by

Which of the following statements is a definition of standard quantity of direct materials allowed for a period? Standard quantity of direct materials is

Cost flow: standard system versus normal system How does the flow of costs in a standard cost system differ from the flow in a normal cost system?

Legacy Company Ltd has determined that 1 unit of its product requires 1.5 hours of direct labour in the assembly department and 1 hour in the finishing department. Assemblers are paid $8.00 per hour and finishers are paid $9.00 per hour. Determine the standard labour cost of one unit.

Twister Pty Ltd has set direct labour standards of 3 hours per unit and $5 per hour. During the month 2900 hours at a total cost of $17 400 were used to produce 1000 units. Determine the total direct labour variance.

Management by exception is best defined as

When material price variances are recognised at the time of material purchase, direct materials used are

Which of the following statements is false concerning the two ways to set standards?

Standard costs can be used for

When investigating variances, management are more likely to investigate those costs that are uncontrollable.

The manager generally responsible for the direct material price variance is the

Which of the following statements is true with regard to variances requiring investigation? i. Favourable variances do not need to be investigated. ii. Large variances should be investigated. iii. Consistent trends in variances should be investigated.

As production takes place, the product costs are added to the

The following data relates to QA firm. Cost standards: Actual results: 7800 units were produced. Calculate the labour efficiency variance.

When a manager receives a bonus based on meeting the standards and achieving increased efficiencies which of the following could be an undesired outcome?

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters