Question 1

The two levels that standards may be set at are

Accepted Answer

A)  normal and fully efficient.
B)  normal and ideal.
C)  ideal and less efficient.
D)  fully efficient and fully effective. B

Question 2

If production exceeds normal capacity, the overhead volume variance will be favourable.

Accepted Answer

A) True 
 B)False  True

Question 3

The labour time requirements for standards may be determined by the

Accepted Answer

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

Question 4

Budget data are NOT journalized in cost accounting systems with the exception of

Accepted Answer

A)  the application of manufacturing overhead.
B)  direct labour budgets.
C)  direct materials budgets.
D)  cash budget data.

Question 5

A company uses 3,150 kilograms of materials and exceeds the standard by 150 kilograms.The quantity variance is $900 unfavourable.What is the standard price?

Accepted Answer

A)  $2.00
B)  $3.50
C)  $4.00
D)  $6.00

Question 6

The starting point for determining the causes of an unfavourable materials price variance is the purchasing department.

Accepted Answer

A) True 
 B)False

Question 7

In income statements prepared for management under a standard cost accounting system, each of the following are reported at actual amounts EXCEPT

Accepted Answer

A)  sales.
B)  selling expenses.
C)  gross profit.
D)  cost of goods sold.

Question 8

Blue Fin Co.produces a product requiring 10 kilograms of material at $1.50 per kilogram.Blue Fin produced 10,000 products during 2016 resulting in a $30,000 unfavourable materials quantity variance.How much direct material did Blue Fin use during 2016?

Accepted Answer

A)  120,000 kilograms
B)  100,000 kilograms
C)  200,000 kilograms
D)  145,000 kilograms

Question 9

Ideal standards will generally result in favourable variances for the company.

Accepted Answer

A) True 
 B)False

Question 10

Standard costs may be incorporated into the accounts in the general ledger.

Accepted Answer

A) True 
 B)False

Question 11

The fixed overhead spending 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 12

Use the following information for questions 
A company developed the following per-unit standards for its product: 5 kilograms of direct materials at $3 per kilogram.Last month, 1,000 kilograms of direct materials were purchased for $2,900.Also last month, 700 kilograms of direct materials were used to produce 135 units.
-What was the direct materials quantity variance for last month?

Accepted Answer

A)  $75 unfavourable
B)  $75 favourable
C)  $900 unfavourable
D)  $900 favourable

Question 13

The total materials variance is equal to the

Accepted Answer

A)  materials price variance.
B)  difference between the materials price variance and materials quantity variance.
C)  product of the materials price variance and the materials quantity variance.
D)  sum of the materials price variance and the materials quantity variance.

Question 14

The cost of freight-in

Accepted Answer

A)  is to be included in the standard cost of direct materials.
B)  is considered a selling expense.
C)  should have a separate standard apart from direct materials.
D)  should not be included in a standard cost system.

Question 15

Normal standards incorporate normal contingencies of production into the standards.

Accepted Answer

A) True 
 B)False

Question 16

If 20,000 kilograms of direct materials are purchased for $14,400 on account and the standard cost is $.70 per kilogram, the journal entry to record the purchase is a) 
$\begin{array}{cc}
  \text { Raw Materials Inventory } &14,400\
 \text { Accounts Payable } &&&14,400\
\end{array}$

b) 
$\begin{array}{cc}
  \text {Work In Process Inventory  } &14,400\
 \text { Accounts Payable } &&14,000\
 \text { Materials Quantity Variance}&&400
\end{array}$

c) 
$\begin{array}{cc}
  \text { Raw Materials I nventory } &\14,400\
 \text {Accounts Payable  } &&14,000\
\text {  Materials Price Variance} &&400
\end{array}$

d) 
$\begin{array}{cc}
  \text { Raw Materials Inventory } &14,000\
 \text {Materials Price Variance  } &400\
  \text {  Accounts Payable} &&14,400
\end{array}$

Accepted Answer

The answer of If 20,000 kilograms of direct materials are...

Question 17

An overhead fixed volume variance is calculated as the difference between normal capacity hours and standard hours allowed

Accepted Answer

A)  times the total predetermined overhead rate.
B)  times the predetermined variable overhead rate.
C)  times the predetermined fixed overhead rate.
D)  divided by actual number of hours worked.

Question 18

The total variance is $10,000 favourable.The total materials variance is $4,000 favourable.The total labour variance is twice the total overhead variance, both which are favourable.What is the total overhead variance?

Accepted Answer

A)  $1,000
B)  $2,000
C)  $3,000
D)  $4,000

Question 19

Which of the following statements about overhead variances is FALSE?

Accepted Answer

A)  The difference between the budgeted fixed overhead and the fixed overhead applied is the volume variance.
B)  Standard hours allowed are used in calculating the volume variance.
C)  The spending variance pertains solely to fixed costs.
D)  The total overhead variance pertains to both variable and fixed costs.

Question 20

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are

Accepted Answer

A)  separately disclosed.
B)  deducted as other expenses and revenues.
C)  added to cost of goods sold.
D)  closed directly to retained earnings.

Exam 12: Standard Costs and Balanced Scorecard

The two levels that standards may be set at are

If production exceeds normal capacity, the overhead volume variance will be favourable.

The labour time requirements for standards may be determined by the

Budget data are NOT journalized in cost accounting systems with the exception of

A company uses 3,150 kilograms of materials and exceeds the standard by 150 kilograms.The quantity variance is $900 unfavourable.What is the standard price?

The starting point for determining the causes of an unfavourable materials price variance is the purchasing department.

In income statements prepared for management under a standard cost accounting system, each of the following are reported at actual amounts EXCEPT

Blue Fin Co.produces a product requiring 10 kilograms of material at $1.50 per kilogram.Blue Fin produced 10,000 products during 2016 resulting in a $30,000 unfavourable materials quantity variance.How much direct material did Blue Fin use during 2016?

Ideal standards will generally result in favourable variances for the company.

Standard costs may be incorporated into the accounts in the general ledger.

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

The total materials variance is equal to the

The cost of freight-in

Normal standards incorporate normal contingencies of production into the standards.

An overhead fixed volume variance is calculated as the difference between normal capacity hours and standard hours allowed

The total variance is $10,000 favourable.The total materials variance is $4,000 favourable.The total labour variance is twice the total overhead variance, both which are favourable.What is the total overhead variance?

Which of the following statements about overhead variances is FALSE?

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are