Question 1

Standard cost system-overhead variances
Assume the following data for John Company's August operations.  (a)Compute the amount of overhead applied to Work in Process during August.$_______________
(b)Compute the total manufacturing overhead budgeted based on hours worked during August.$_______________
(c)Compute the overhead spending variance for August.Indicate whether favorable (F)or unfavorable (U).$_______________
(d)Compute the overhead volume variance for August.Indicate whether favorable (F)or unfavorable (U).$_______________

Accepted Answer

The answer of Standard cost system-overhead variances
Assume the following data...

Question 2

In a standard cost system,actual costs are charged to work in process as they are incurred.

Accepted Answer

A) True 
 B)False

Question 3

It is possible for the overhead volume variance to be favorable and the overhead spending variance to be unfavorable.

Accepted Answer

A) True 
 B)False

Question 4

There is an unfavorable labor efficiency variance when:

Accepted Answer

A) Actual hours are greater than standard hours. 
B) Actual hours are less than standard hours. 
C) The standard rate per hour is greater than the actual rate per hour. 
D) The standard rate per hour is less than the actual rate per hour.

Question 5

In evaluating cost variances,the accounting department determines whether variances are favorable or unfavorable.

Accepted Answer

A) True 
 B)False

Question 6

A large unanticipated reduction in the property taxes on a company's factory would,all other things equal,most likely cause:

Accepted Answer

A) A favorable overhead spending variance. 
B) An unfavorable overhead spending variance. 
C) A favorable overhead volume variance. 
D) An unfavorable overhead volume variance.

Question 7

A materials price variance is arrived at by taking standard quantity times actual price,less standard price.

Accepted Answer

A) True 
 B)False

Question 8

EJB Company used a "normal" production level of 10,000 units to determine the standard per-unit cost of manufacturing overhead.Which of the following is not true?

Accepted Answer

A) There is no overhead volume variance for a given month if actual production that month is 10,000 units. 
B) When actual production exceeds 10,000 units,use of standard costs results in a favorable overhead volume variance. 
C) When actual production is less than 10,000 units,use of standard costs results in an unfavorable total overhead variance. 
D) Overhead variances arising as a result of producing more or less than 10,000 units do not indicate either strong or poor performance by the Production Department.

Question 9

The materials price variance is calculated by multiplying the difference between actual unit price and standard unit price,by the standard units purchased.

Accepted Answer

A) True 
 B)False

Question 10

The Victor Corporation has been incurring favorable overhead volume variances in each of the last several months.These persistent favorable variances indicate:

Accepted Answer

A) Victor's management is unusually efficient. 
B) The overhead application rate should be revised upward. 
C) Monthly output is consistently under budget. 
D) Monthly output is consistently over that budgeted.

Question 11

A standard cost is predetermined,that is,determined before actual costs of the current period have been computed.

Accepted Answer

A) True 
 B)False

Question 12

Standard cost system-materials and labor variances
The Hemlock Corporation produces a single product.The company has developed the following standards for labor and materials:  During the past month,the company purchased 3,500 pounds of direct materials at a total cost of $4,550.All of this material was used in the production of 1,300 units of output.Direct labor cost totaled $40,300 for the month.The following variances have been computed:  Compute the following.If the result is a variance indicate whether it is favorable or unfavorable.If necessary,round your answers.
(a)The standard price of materials ________________.
(b)The standard quantity of materials allowed per unit of output _________.
(c)The actual direct labor cost per hour for the month _____________.
(d)The labor rate variance _____________________.

Accepted Answer

The answer of Standard cost system-materials and labor variances
The Hemlock...

Question 13

In establishing standard costs for labor,management must look at all of the following except:

Accepted Answer

A) Time allowed to produce each product. 
B) Direct labor requirements for each product. 
C) The wage rate of a direct laborer. 
D) The quantity of materials for each product.

Question 14

If fewer units are produced than had been estimated when standard unit costs were determined,there would normally be:

Accepted Answer

A) A favorable labor efficiency (usage)variance. 
B) An unfavorable overhead volume variance. 
C) A favorable materials quantity variance. 
D) An unfavorable overhead spending variance.

Question 15

An unfavorable labor rate variance could most likely result from all of the following except:

Accepted Answer

A) Producing at levels of output which exceed normal output levels. 
B) Using highly skilled laborers to perform tasks normally performed by unskilled laborers. 
C) Having laborers work excessive overtime hours. 
D) Using outdated standard cost figures.

Question 16

An unfavorable overhead volume variance results from:

Accepted Answer

A) An unfavorable overhead spending variance. 
B) Poor decisions made by the production manager. 
C) Producing at levels of output which exceed normal output levels. 
D) Producing at levels of output which fall short of normal output levels.

Question 17

Standard cost system-disposition of variances
The cost of goods sold at standard cost for Field Company for 2015 amounted to $425,000 and was 60% of net sales.As of the end of 2015,the total of balances remaining in cost variance accounts was a net unfavorable cost variance of $8,000,which is not considered material.
(a)What is the amount shown in Field 's 2015 income statement for cost of goods sold? $_______________
(b)What is the amount reported in Field 's 2015 income statement for gross profit on sales? $_______________
(If required,round your answer to nearest whole dollar value.)

Accepted Answer

The answer of Standard cost system-disposition of variances
The cost of...

Question 18

An unfavorable volume variance in a factory is generally:

Accepted Answer

A) The responsibility of the production manager. 
B) Viewed as an idle capacity loss. 
C) The result of actual volume exceeding normal volume. 
D) Treated as part of the controllable factory overhead variance.

Question 19

Controlling the materials price variance is usually the responsibility of:

Accepted Answer

A) The purchasing agent. 
B) The marketing director. 
C) The production supervisor. 
D) The cost accountant.

Question 20

The Delux Company purchased and used 2,900 yards of material in its manufacturing process.The actual cost of the materials was $2.20 per yard.Standard materials and costs were 2,700 yards at $2.00 per yard.
Required:
(a)Compute the materials quantity variance.
(b)Compute the materials price variance.
(c)Compute the total material variance.

Accepted Answer

The answer of The Delux Company purchased and used 2,900...

Exam 24: Standard Cost Systems

In a standard cost system,actual costs are charged to work in process as they are incurred.

It is possible for the overhead volume variance to be favorable and the overhead spending variance to be unfavorable.

There is an unfavorable labor efficiency variance when:

In evaluating cost variances,the accounting department determines whether variances are favorable or unfavorable.

A large unanticipated reduction in the property taxes on a company's factory would,all other things equal,most likely cause:

A materials price variance is arrived at by taking standard quantity times actual price,less standard price.

EJB Company used a "normal" production level of 10,000 units to determine the standard per-unit cost of manufacturing overhead.Which of the following is not true?

The materials price variance is calculated by multiplying the difference between actual unit price and standard unit price,by the standard units purchased.

The Victor Corporation has been incurring favorable overhead volume variances in each of the last several months.These persistent favorable variances indicate:

A standard cost is predetermined,that is,determined before actual costs of the current period have been computed.

In establishing standard costs for labor,management must look at all of the following except:

If fewer units are produced than had been estimated when standard unit costs were determined,there would normally be:

An unfavorable labor rate variance could most likely result from all of the following except:

An unfavorable overhead volume variance results from:

An unfavorable volume variance in a factory is generally:

Controlling the materials price variance is usually the responsibility of: