Question 1

Which of the following statements is false?

Accepted Answer

A)  Unfavourable variances represent the costs of producing inefficiently. 
B)  Unfavourable variances (after closing to cost of goods sold)cause cost of goods sold to be higher. 
C)  Unfavourable variances are recorded as a credit entry. 
D)  Significant unfavourable variances should be investigated by managers. 
A)  Unfavourable variances represent the costs of producing inefficiently. 
B)  Unfavourable variances (after closing to cost of goods sold)cause cost of goods sold to be higher. 
C)  Unfavourable variances are recorded as a credit entry. 
D)  Significant unfavourable variances should be investigated by managers.

Question 2

Which of the following journal entries correctly represents the recording of an unfavourable material price variance?

Accepted Answer

A)  Direct material debit,materials price variance and accounts payable credit. 
B)  Direct material and materials price variance debit,accounts payable credit. 
C)  Direct material debit,work in process and accounts payable credit. 
D)  Direct materials debit,accounts payable credit. 
A)  Direct material debit,materials price variance and accounts payable credit. 
B)  Direct material and materials price variance debit,accounts payable credit. 
C)  Direct material debit,work in process and accounts payable credit. 
D)  Direct materials debit,accounts payable credit.

Question 3

The following data relates to QA firm:
Cost standards:
Actual results:
7 800 units were produced
Calculate the direct material price variance,based on the quantity of materials purchased.

Accepted Answer

A)  $2310 (F) 
B)  $2310 (U) 
C)  $2500 (U) 
D)  $2500 (F) 
A)  $2310 (F) 
B)  $2310 (U) 
C)  $2500 (U) 
D)  $2500 (F)

Question 4

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)

Question 5

When considering the significance of cost variances,managers should not consider:

Accepted Answer

A)  relative size of the variances 
B)  recurring variances 
C)  the trends of the variances 
D)  favourable or unfavourable status of the variances 
A)  relative size of the variances 
B)  recurring variances 
C)  the trends of the variances 
D)  favourable or unfavourable status of the variances

Question 6

Which of the following are methods for setting standards?

Accepted Answer

A)  Historical data analysis and cost analysis 
B)  Task analysis and analysis of historical data 
C)  Budgetary analysis and data analysis 
D)  Cost analysis and budgetary analysis 
A)  Historical data analysis and cost analysis 
B)  Task analysis and analysis of historical data 
C)  Budgetary analysis and data analysis 
D)  Cost analysis and budgetary analysis

Question 7

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.Which of the following is a likely explanation for the July labour efficiency variance?

Accepted Answer

A)  The standard was set incorrectly. 
B)  A machine breakdown has resulted in unanticipated inefficiencies. 
C)  The production level was smaller than expected. 
D)  Both incorrectly set standards and a machine breakdown are likely explanations. 
A)  The standard was set incorrectly. 
B)  A machine breakdown has resulted in unanticipated inefficiencies. 
C)  The production level was smaller than expected. 
D)  Both incorrectly set standards and a machine breakdown are likely explanations.

Question 8

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 9

Which of the following statements regarding allowances for spoilage and/or inefficiency is not correct?

Accepted Answer

A)  When allowances are not included within the standards,any inefficiencies are highlighted as unfavourable variances. 
B)  When allowances are not included within the standards,any inefficiencies are highlighted as favourable variances. 
C)  Firms would never set standards that included an allowance for spoilage. 
D)  When allowances are not included within the standards,any inefficiencies are highlighted as favourable variances AND firms would never set standards that included an allowance for spoilage. 
A)  When allowances are not included within the standards,any inefficiencies are highlighted as unfavourable variances. 
B)  When allowances are not included within the standards,any inefficiencies are highlighted as favourable variances. 
C)  Firms would never set standards that included an allowance for spoilage. 
D)  When allowances are not included within the standards,any inefficiencies are highlighted as favourable variances AND firms would never set standards that included an allowance for spoilage.

Question 10

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 11

In setting standards,it is common to carry out time and motion studies to determine how long it should take workers to perform a particular process.

Accepted Answer

A) True 
 B)False

Question 12

Selected data about a firm's materials follows.What amount would be debited to materials account for the purchase of material?

Accepted Answer

A)  $780 
B)  $750 
C)  $720 
D)  $810 
A)  $780 
B)  $750 
C)  $720 
D)  $810

Question 13

For a particular period a firm worked a larger number of overtime hours than planned in order to complete a larger than usual number of job orders.The jobs were all completed within the standard time allowed for each job.Assuming only the facts given,what variance(s)would result from these facts?

Accepted Answer

A)  Unfavourable labour rate;unfavourable labour efficiency 
B)  Unfavourable labour efficiency;unfavourable material quantity variance 
C)  Unfavourable labour rate;unfavourable labour efficiency;unfavourable material quantity 
D)  None of the given answers 
A)  Unfavourable labour rate;unfavourable labour efficiency 
B)  Unfavourable labour efficiency;unfavourable material quantity variance 
C)  Unfavourable labour rate;unfavourable labour efficiency;unfavourable material quantity 
D)  None of the given answers

Question 14

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 15

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

Accepted Answer

A) True 
 B)False

Question 16

Five kilograms at a cost of $7 per kilogram and 2 hours @ $32 per hour are examples of standard costs for the production of a product.

Accepted Answer

A) True 
 B)False

Question 17

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.The labour efficiency variances for the last 6 months were all favourable: $500F (July),$600F (August),$750F (September),$880F (October),$900F (November)and $990F (December).Jasmine decides not to investigate these variances.Do you agree with her decision?

Accepted Answer

A)  Yes,because all the variances are below the critical value. 
B)  Yes,because all the variances are below the critical value and are favourable. 
C)  No,because there is a trend of the variances increasing steadily over time. 
D)  No,she should investigate the variances in November and December because they are both within 10% of the critical value. 
A)  Yes,because all the variances are below the critical value. 
B)  Yes,because all the variances are below the critical value and are favourable. 
C)  No,because there is a trend of the variances increasing steadily over time. 
D)  No,she should investigate the variances in November and December because they are both within 10% of the critical value.

Question 18

A standard that assumes a production process is as efficient as practical under normal operating conditions is:

Accepted Answer

A)  a perfection standard 
B)  an attainable standard 
C)  an average standard 
D)  an operating standard 
A)  a perfection standard 
B)  an attainable standard 
C)  an average standard 
D)  an operating standard

Question 19

When developing a perfection standard for direct labour,a manager should include which of the following?
I labour on-costs
Ii occasional inefficiencies and machine breakdowns
Iii a minimal acceptable idle time

Accepted Answer

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

Question 20

If Company XYZ purchased 30 000 kg of brass metal at an actual price of $7.10 per kg (standard price is $7.00 per kg),the entry to the direct material price variance should be:

Accepted Answer

A)  $3000 debit 
B)  $3000 credit 
C)  $1500 debit 
D)  $1500 credit 
A)  $3000 debit 
B)  $3000 credit 
C)  $1500 debit 
D)  $1500 credit

Which of the following statements is false?

Which of the following journal entries correctly represents the recording of an unfavourable material price variance?

The following data relates to QA firm: Cost standards: Actual results: 7 800 units were produced Calculate the direct material price variance,based on the quantity of materials purchased.

When considering the significance of cost variances,managers should not consider:

Which of the following are methods for setting standards?

An unfavourable labour efficiency variance indicates that:

Which of the following statements regarding allowances for spoilage and/or inefficiency is not correct?

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.

In setting standards,it is common to carry out time and motion studies to determine how long it should take workers to perform a particular process.

Selected data about a firm's materials follows.What amount would be debited to materials account for the purchase of material?

For a particular period a firm worked a larger number of overtime hours than planned in order to complete a larger than usual number of job orders.The jobs were all completed within the standard time allowed for each job.Assuming only the facts given,what variance(s)would result from these facts?

Management by exception is best defined as:

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

Five kilograms at a cost of $7 per kilogram and 2 hours @ $32 per hour are examples of standard costs for the production of a product.

A standard that assumes a production process is as efficient as practical under normal operating conditions is:

When developing a perfection standard for direct labour,a manager should include which of the following? I labour on-costs Ii occasional inefficiencies and machine breakdowns Iii a minimal acceptable idle time

If Company XYZ purchased 30 000 kg of brass metal at an actual price of $7.10 per kg (standard price is $7.00 per kg),the entry to the direct material price variance should be:

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 false?

Which of the following journal entries correctly represents the recording of an unfavourable material price variance?

The following data relates to QA firm: Cost standards: Actual results: 7 800 units were produced Calculate the direct material price variance,based on the quantity of materials purchased.

When considering the significance of cost variances,managers should not consider:

Which of the following are methods for setting standards?

An unfavourable labour efficiency variance indicates that:

Which of the following statements regarding allowances for spoilage and/or inefficiency is not correct?

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.

In setting standards,it is common to carry out time and motion studies to determine how long it should take workers to perform a particular process.

Selected data about a firm's materials follows.What amount would be debited to materials account for the purchase of material?

For a particular period a firm worked a larger number of overtime hours than planned in order to complete a larger than usual number of job orders.The jobs were all completed within the standard time allowed for each job.Assuming only the facts given,what variance(s)would result from these facts?

Management by exception is best defined as:

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

Five kilograms at a cost of $7 per kilogram and 2 hours @ $32 per hour are examples of standard costs for the production of a product.

A standard that assumes a production process is as efficient as practical under normal operating conditions is:

When developing a perfection standard for direct labour,a manager should include which of the following? I labour on-costs Ii occasional inefficiencies and machine breakdowns Iii a minimal acceptable idle time

If Company XYZ purchased 30 000 kg of brass metal at an actual price of $7.10 per kg (standard price is $7.00 per kg),the entry to the direct material price variance should be:

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