Question 1

Debit balances in variance accounts represent

Accepted Answer

A) unfavorable variances. 
B) favorable variances. 
C) favorable for price variances; unfavorable for quantity variances. 
D) favorable for quantity variances; unfavorable for price variances.

Question 2

The labor time requirements for standards may be determined by the

Accepted Answer

A) sales manager. 
B) product manager. 
C) industrial engineers. 
D) payroll department manager.

Question 3

Which of the following statements is true?

Accepted Answer

A) Variances are the differences between total actual costs and total standard costs. 
B) When actual costs exceed standard costs, the variance is favorable. 
C) An unfavorable variance results when actual costs are decreasing but standards are not changed. 
D) All of the above are true.

Question 4

A company purchases 20,000 pounds of materials.The materials price variance is $4,000 favorable.What is the difference between the standard and actual price paid for the materials?

Accepted Answer

A) $1.00 
B) $0.20 
C) $5.00 
D) Cannot be determined from the data provided.

Question 5

The predetermined overhead rate for Zane Company is $5, comprised of a variable overhead rate of $3 and a fixed rate of $2.The amount of budgeted overhead costs at normal capacity of $150,000 was divided by normal capacity of 30,000 direct labor hours, to arrive at the predetermined overhead rate of $5.Actual overhead for June was $8,900 variable and $5,400 fixed, and 1,500 units were produced.The direct labor standard is 2 hours per unit produced.The total overhead variance is

Accepted Answer

A) $1,800 F. 
B) $700 F. 
C) $700 U. 
D) $1,800 U.

Question 6

If the standard hours allowed are less than the standard hours at normal capacity, the volume variance

Accepted Answer

A) cannot be calculated. 
B) will be favorable. 
C) will be unfavorable. 
D) will be greater than the controllable variance.

Question 7

Allowances should not be made in the direct labor quantity standard for

Accepted Answer

A) wasted time. 
B) rest periods. 
C) cleanup. 
D) machine downtime.

Question 8

The standard rate of pay is $12 per direct labor hour. If the actual direct labor payroll was $47,040 for 4,000 direct labor hours worked, the direct labor price (rate) variance is

Accepted Answer

A) $960 unfavorable. 
B) $960 favorable. 
C) $1,200 unfavorable. 
D) $1,200 favorable.

Question 9

The costing of inventories at standard cost for external financial statement reporting purposes is

Accepted Answer

A) not permitted. 
B) preferable to reporting at actual costs. 
C) in accordance with generally accepted accounting principles if significant differences exist between actual and standard costs. 
D) in accordance with generally accepted accounting principles if significant differences do not exist between actual and standard costs.

Question 10

The overhead controllable variance is calculated as the difference between actual overhead costs incurred and the budgeted

Accepted Answer

A) overhead costs for the standard hours allowed. 
B) overhead costs applied to the product. 
C) overhead costs at the normal level of activity. 
D) fixed overhead costs.

Question 11

Use the following information for questions 
Budgeted overhead for Cinnabar Industries at normal capacity of 30,000 direct labor hours is $6 per hour variable and $4 per hour fixed. In May, $310,000 of overhead was incurred in working 31,500 hours when 32,000 standard hours were allowed.
-The overhead volume variance is

Accepted Answer

A) $8,000 favorable. 
B) $11,000 favorable. 
C) $5,000 favorable. 
D) $10,000 favorable.

Question 12

Standard costs may be used by

Accepted Answer

A) universities. 
B) governmental agencies. 
C) charitable organizations. 
D) All of these answers are correct.

Question 13

Ideal standards

Accepted Answer

A) are rigorous but attainable. 
B) are the standards generally used in a master budget. 
C) reflect optimal performance under perfect operating conditions. 
D) will always motivate employees to achieve the maximum output.

Question 14

The final decision as to what standard costs should be is the responsibility of

Accepted Answer

A) the quality control engineer. 
B) the managerial accountants. 
C) the purchasing agent. 
D) management.

Question 15

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound.In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135.Dillon's materials quantity variance is

Accepted Answer

A) $135 F. 
B) $465 U. 
C) $600 U. 
D) $1,050 U.

Question 16

The budgeted overhead costs for standard hours allowed and the overhead costs applied to the product are the same amount

Accepted Answer

A) for both variable and fixed overhead costs. 
B) only when standard hours allowed are less than normal capacity. 
C) for variable overhead costs. 
D) for fixed overhead costs.

Question 17

The direct labor quantity standard is sometimes called the direct labor

Accepted Answer

A) volume standard. 
B) effectiveness standard. 
C) efficiency standard. 
D) quality standard.

Question 18

Variances from standards are

Accepted Answer

A) expressed in total dollars. 
B) expressed on a per-unit basis. 
C) expressed on a percentage basis. 
D) All of these answers are correct.

Question 19

The difference between the actual labor rate multiplied by the actual labor hours worked and the standard labor rate multiplied by the standard labor hours is the

Accepted Answer

A) total labor variance. 
B) labor price variance. 
C) labor quantity variance. 
D) labor efficiency variance.

Question 20

The per-unit standards for direct materials are 2 pounds at $5 per pound.Last month, 11,200 pounds of direct materials that actually cost $53,000 were used to produce 6,000 units of product.The direct materials quantity variance for last month was

Accepted Answer

A) $4,000 favorable. 
B) $3,000 favorable. 
C) $4,000 unfavorable. 
D) $7,000 unfavorable.

Exam 11: Reporting and Analyzing Stockholders Equity