Question 1

Which of the following statements is/are false?

Accepted Answer

A)  All favourable variances represent the costs of producing efficiently. 
B)  Favourable variances (after closing to cost of goods sold) cause cost of goods sold to be lower. 
C)  Significant favourable variances do not need to be investigated by managers. 
D)  All favourable variances represent the costs of producing efficiently AND significant favourable variances do not need to be investigated by managers. 
A)  All favourable variances represent the costs of producing efficiently. 
B)  Favourable variances (after closing to cost of goods sold) cause cost of goods sold to be lower. 
C)  Significant favourable variances do not need to be investigated by managers. 
D)  All favourable variances represent the costs of producing efficiently AND significant favourable variances do not need to be investigated by managers.

Question 2

An unfavourable labour efficiency variance indicates that

Accepted Answer

A)  standard hours exceed actual hours. 
B)  actual hours exceed standard hours. 
C)  standard rate times standard hours exceeds actual rate times actual hours. 
D)  actual rate exceeds standard rate. 
A)  standard hours exceed actual hours. 
B)  actual hours exceed standard hours. 
C)  standard rate times standard hours exceeds actual rate times actual hours. 
D)  actual rate exceeds standard rate.

Question 3

Jay Bole is in the process of developing a standard for the labour cost of one unit of Product X. According to the design manual, it takes a skilled worker 30 minutes to produce one unit of Product X when the workshop is operating at peak condition. However, Product X is quite complex, and even a skilled worker operating in high efficiency often needs another 5 minutes to adjust the tools, re-oil the machine, and rework some aspects of the product. A skilled worker is paid $30 per hour, while the company pays 20 per cent on-costs on top of this.
Jay decides to develop a practical standard. The standard labour cost for one unit of Product X is

Accepted Answer

A)  $15. 
B)  $17.50. 
C)  $18. 
D)  $21. 
A)  $15. 
B)  $17.50. 
C)  $18. 
D)  $21.

Question 4

It is possible to set standards by benchmarking against better performing companies in
the industry.

Accepted Answer

A) True 
 B)False

Question 5

A direct labour efficiency variance cannot be caused by

Accepted Answer

A)  producing fewer finished units than originally planned. 
B)  poor quality raw materials. 
C)  employee inefficiency. 
D)  an out-of-date labour time standard. 
A)  producing fewer finished units than originally planned. 
B)  poor quality raw materials. 
C)  employee inefficiency. 
D)  an out-of-date labour time standard.

Question 6

Which of the following statements is/are true?

Accepted Answer

A)  The standard direct labour hours per unit of output are used to calculate a labour rate variance. 
B)  The standard direct labour hours per unit of output are used to calculate a labour efficiency variance. 
C)  The standard direct labour hours per unit of output cannot be determined until the end of the period. 
D)  All of the given answers. 
A)  The standard direct labour hours per unit of output are used to calculate a labour rate variance. 
B)  The standard direct labour hours per unit of output are used to calculate a labour efficiency variance. 
C)  The standard direct labour hours per unit of output cannot be determined until the end of the period. 
D)  All of the given answers.

Question 7

Production managers are usually in the best position to influence labour rates, labour usage and material prices.

Accepted Answer

A) True 
 B)False

Question 8

Explain how practical standards the attitude of managers and their willingness to commit to the set standards.

Accepted Answer

Standards that are challenging but are e

Question 9

What is the most viable rule of thumb for choosing variances that should be investigated?

Accepted Answer

A)  Greater than $10 000 or greater than 10 per cent of standard cost 
B)  Greater than 50 per cent of standard 
C)  Never investigate favourable variances 
D)  Always investigate unfavourable variances 
A)  Greater than $10 000 or greater than 10 per cent of standard cost 
B)  Greater than 50 per cent of standard 
C)  Never investigate favourable variances 
D)  Always investigate unfavourable variances

Question 10

A favourable labour rate variance leads to a

Accepted Answer

A)  credit to the labour rate variance account. 
B)  debit to the labour rate variance account. 
C)  larger than standard debit to work in process. 
D)  None of the given answers 
A)  credit to the labour rate variance account. 
B)  debit to the labour rate variance account. 
C)  larger than standard debit to work in process. 
D)  None of the given answers

Question 11

A department's budgeted output for a 4-week period was 500 units at a standard cost of $100 per unit. The actual production was 450 units and the firm's ledger revealed actual costs for the month to be $50 200. The standard production cost for the period is

Accepted Answer

A)  $50 000. 
B)  $50 200. 
C)  $45 000. 
D)  insufficient information to determine. 
A)  $50 000. 
B)  $50 200. 
C)  $45 000. 
D)  insufficient information to determine.

Question 12

An debit balance in the direct material price variance account or direct labour price variance accounts would cause the costs of goods sold to

Accepted Answer

A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  have no impact. 
A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  have no impact.

Question 13

Which of the following statements is/are true?

Accepted Answer

A)  Many service organisations cannot use standard costing because their services are non-repetitive. 
B)  Practical standards are also known as attainable standards. 
C)  Practical standards incorporate a certain amount of inefficiency, such as that caused by an occasional machine breakdown. 
D)  All of the given answers 
A)  Many service organisations cannot use standard costing because their services are non-repetitive. 
B)  Practical standards are also known as attainable standards. 
C)  Practical standards incorporate a certain amount of inefficiency, such as that caused by an occasional machine breakdown. 
D)  All of the given answers

Question 14

A control system comprises

Accepted Answer

A)  a predetermined or standard performance level. 
B)  a measure of actual performance. 
C)  a comparison between standard and actual performance. 
D)  All of the given answers 
A)  a predetermined or standard performance level. 
B)  a measure of actual performance. 
C)  a comparison between standard and actual performance. 
D)  All of the given answers

Question 15

The production supervisor generally does not influence the

Accepted Answer

A)  direct material quantity variance. 
B)  direct labour rate variance. 
C)  direct labour efficiency variance. 
D)  direct material price variance. 
A)  direct material quantity variance. 
B)  direct labour rate variance. 
C)  direct labour efficiency variance. 
D)  direct material price variance.

Question 16

Standard costs are used for evaluating performance and controlling costs but they are never used for costing products.

Accepted Answer

A) True 
 B)False

Question 17

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 standard material quantity allowed for June production.

Accepted Answer

A)  4000 kg 
B)  8 kg 
C)  3360 kg 
D)  3500 kg 
A)  4000 kg 
B)  8 kg 
C)  3360 kg 
D)  3500 kg

Question 18

Which of the following statements is/are true?

Accepted Answer

A)  Variances are temporary accounts. 
B)  Variance accounts may be closed to cost of goods sold. 
C)  Favourable variances are recorded as a credit entry. 
D)  All of the given answers. 
A)  Variances are temporary accounts. 
B)  Variance accounts may be closed to cost of goods sold. 
C)  Favourable variances are recorded as a credit entry. 
D)  All of the given answers.

Question 19

A labour efficiency variance is shown by

Accepted Answer

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

Question 20

Which of the following statements regarding standard costing is/are true?

Accepted Answer

A)  Standard costing is useful in diagnosing organisational performance. 
B)  Standard costing is useful in performance appraisal. 
C)  Standard costing is useful in determining employee pay bonuses. 
D)  All of the given answers. 
A)  Standard costing is useful in diagnosing organisational performance. 
B)  Standard costing is useful in performance appraisal. 
C)  Standard costing is useful in determining employee pay bonuses. 
D)  All of the given answers.

Which of the following statements is/are false?

An unfavourable labour efficiency variance indicates that

It is possible to set standards by benchmarking against better performing companies in the industry.

A direct labour efficiency variance cannot be caused by

Which of the following statements is/are true?

Production managers are usually in the best position to influence labour rates, labour usage and material prices.

Explain how practical standards the attitude of managers and their willingness to commit to the set standards.

What is the most viable rule of thumb for choosing variances that should be investigated?

A favourable labour rate variance leads to a

A department's budgeted output for a 4-week period was 500 units at a standard cost of $100 per unit. The actual production was 450 units and the firm's ledger revealed actual costs for the month to be $50 200. The standard production cost for the period is

An debit balance in the direct material price variance account or direct labour price variance accounts would cause the costs of goods sold to

Which of the following statements is/are true?

A control system comprises

The production supervisor generally does not influence the

Standard costs are used for evaluating performance and controlling costs but they are never used for costing products.

Which of the following statements is/are true?

A labour efficiency variance is shown by

Which of the following statements regarding standard costing is/are true?

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

Which of the following statements is/are false?

An unfavourable labour efficiency variance indicates that

It is possible to set standards by benchmarking against better performing companies in the industry.

A direct labour efficiency variance cannot be caused by

Which of the following statements is/are true?

Production managers are usually in the best position to influence labour rates, labour usage and material prices.

Explain how practical standards the attitude of managers and their willingness to commit to the set standards.

What is the most viable rule of thumb for choosing variances that should be investigated?

A favourable labour rate variance leads to a

A department's budgeted output for a 4-week period was 500 units at a standard cost of $100 per unit. The actual production was 450 units and the firm's ledger revealed actual costs for the month to be $50 200. The standard production cost for the period is

An debit balance in the direct material price variance account or direct labour price variance accounts would cause the costs of goods sold to

Which of the following statements is/are true?

A control system comprises

The production supervisor generally does not influence the

Standard costs are used for evaluating performance and controlling costs but they are never used for costing products.

Which of the following statements is/are true?

A labour efficiency variance is shown by

Which of the following statements regarding standard costing is/are true?

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