Question 1

Actual costs that vary from standard costs always indicate inefficiencies.

Accepted Answer

A) True 
 B)False

Question 2

The standard direct materials quantity does not include allowances for

Accepted Answer

A) unavoidable waste. 
B) normal spoilage. 
C) unexpected spoilage. 
D) all of the above are included.

Question 3

An advantage of standard costs is that they simplify costing of inventories and reduce clerical costs.

Accepted Answer

A) True 
 B)False

Question 4

Dillon has a standard of 2 hours of labor per unit, at $12 per hour.In producing 2,000 units, Dillon used 3,850 hours of labor at a total cost of $46,970.Dillon's labor price variance is

Accepted Answer

A) $770 U. 
B) $800 U. 
C) $1,030 F. 
D) $1,930 F.

Question 5

A variance is the difference between actual costs and standard costs.

Accepted Answer

A) True 
 B)False

Question 6

Which one of the following describes the total overhead variance?

Accepted Answer

A) The difference between what was actually incurred and the flexible budget amount 
B) The difference between what was actually incurred and overhead applied 
C) The difference between the overhead applied and the flexible budget amount 
D) The difference between what was actually incurred and the total production budget

Question 7

A company purchases 12,000 pounds of materials.The materials price variance is $6,000 favorable.What is the difference between the standard and actual price paid for the materials?

Accepted Answer

A) $1.00 
B) $.50 
C) $2.00 
D) $6.00

Question 8

If the materials price variance is $3,600 F and the materials quantity and labor variances are each $2,700 U, what is the total materials variance?

Accepted Answer

A) $3,600 F 
B) $2,700 U 
C) $900 F 
D) $4,050 U

Question 9

In concept, standards and budgets are essentially the same.

Accepted Answer

A) True 
 B)False

Question 10

The total variance is $35,000.The total materials variance is $14,000.The total labor variance is twice the total overhead variance.What is the total overhead variance?

Accepted Answer

A) $3,500 
B) $7,000 
C) $10,500 
D) $14,000

Question 11

Use the following information for questions 
Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively.
-The standard direct labor rate per hour is

Accepted Answer

A) $ 12.00. 
B) $ 12.30. 
C) $15.60. 
D) $15.90.

Question 12

Scorpion Production Company planned to use 1 yard of plastic per unit budgeted at $81 a yard.However, the plastic actually cost $80 per yard.The company actually made 3,900 units, although it had planned to make only 3,300 units.Total yards used for production were 3,960.How much is the total materials variance?

Accepted Answer

A) $48,600 U 
B) $4,860 U 
C) $3,960 F 
D) $900 U

Question 13

In developing a standard cost for direct materials, a price factor and a quantity factor must be considered.

Accepted Answer

A) True 
 B)False

Question 14

A standard which represents an efficient level of performance that is attainable under expected operating conditions is called a(n)

Accepted Answer

A) ideal standard. 
B) loose standard. 
C) tight standard. 
D) normal standard.

Question 15

Standard cost + price variance + quantity variance = Budgeted cost.

Accepted Answer

A) True 
 B)False

Question 16

Variance reports are

Accepted Answer

A) external financial reports. 
B) SEC financial reports. 
C) internal reports for management. 
D) All of these answers are correct.

Question 17

The direct materials quantity standard should

Accepted Answer

A) exclude unavoidable waste. 
B) exclude quality considerations. 
C) allow for normal spoilage. 
D) always be expressed as an ideal standard.

Question 18

The formula for the labor price variance is

Accepted Answer

A) (AH) x (SR) less (SH) x (SR). 
B) (AH) x (AR) less (AH) x (SR). 
C) (AH) x (AR) less (SH) x (SR). 
D) (AH) x (SR) less (AH) x (SR).

Question 19

Clark Company manufactures a product with a standard direct labor cost of two hours at $18.00 per hour.During July, 2,000 units were produced using 4,200 hours at $18.30 per hour.The labor price variance was

Accepted Answer

A) $1,260 U. 
B) $4,860 U. 
C) $4,860 F. 
D) $3,600 U.

Question 20

The overhead controllable variance is the difference between the

Accepted Answer

A) budgeted overhead based on standard hours allowed and the overhead applied to production. 
B) budgeted overhead based on standard hours allowed and budgeted overhead based on actual hours worked. 
C) actual overhead and the overhead applied to production. 
D) actual overhead and budgeted overhead based on standard hours allowed.

Exam 11: Reporting and Analyzing Stockholders Equity

Actual costs that vary from standard costs always indicate inefficiencies.

The standard direct materials quantity does not include allowances for

An advantage of standard costs is that they simplify costing of inventories and reduce clerical costs.

Dillon has a standard of 2 hours of labor per unit, at $12 per hour.In producing 2,000 units, Dillon used 3,850 hours of labor at a total cost of $46,970.Dillon's labor price variance is

A variance is the difference between actual costs and standard costs.

Which one of the following describes the total overhead variance?

A company purchases 12,000 pounds of materials.The materials price variance is $6,000 favorable.What is the difference between the standard and actual price paid for the materials?

If the materials price variance is $3,600 F and the materials quantity and labor variances are each $2,700 U, what is the total materials variance?

In concept, standards and budgets are essentially the same.

The total variance is $35,000.The total materials variance is $14,000.The total labor variance is twice the total overhead variance.What is the total overhead variance?

In developing a standard cost for direct materials, a price factor and a quantity factor must be considered.

A standard which represents an efficient level of performance that is attainable under expected operating conditions is called a(n)

Standard cost + price variance + quantity variance = Budgeted cost.

Variance reports are

The direct materials quantity standard should

The formula for the labor price variance is

Clark Company manufactures a product with a standard direct labor cost of two hours at $18.00 per hour.During July, 2,000 units were produced using 4,200 hours at $18.30 per hour.The labor price variance was

The overhead controllable variance is the difference between the