Question 1

Allowance for spoilage is part of the direct

Accepted Answer

A) materials price standard. 
B) materials quantity standard. 
C) labor price standard. 
D) labor quantity standard. 
A) materials price standard. 
B) materials quantity standard. 
C) labor price standard. 
D) labor quantity standard.

Question 2

The matrix approach to variance analysis

Accepted Answer

A) will yield slightly different variances than the formula approach. 
B) is more accurate than the formula approach. 
C) does not separate the price and quantity variance calculations. 
D) provides a convenient structure for determining each variance. 
A) will yield slightly different variances than the formula approach. 
B) is more accurate than the formula approach. 
C) does not separate the price and quantity variance calculations. 
D) provides a convenient structure for determining each variance.

Question 3

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 materials price per pound is

Accepted Answer

A) $1.96. 
B) $2.00. 
C) $2.13 
D) $2.17 
A) $1.96. 
B) $2.00. 
C) $2.13 
D) $2.17

Question 4

A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $5 per pound.If 12,000 units of product were produced last month and 37,500 pounds of direct materials were used, the direct materials quantity variance was

Accepted Answer

A) $4,500 favorable. 
B) $7,500 unfavorable. 
C) $4,500 unfavorable. 
D) $7,500 favorable. 
A) $4,500 favorable. 
B) $7,500 unfavorable. 
C) $4,500 unfavorable. 
D) $7,500 favorable.

Question 5

The formula for the materials quantity variance is

Accepted Answer

A) (SQ × AP) - (SQ × SP). 
B) (AQ × AP) - (AQ × SP). 
C) (AQ × SP) - (SQ × SP). 
D) (AQ × AP) - (SQ × SP). 
A) (SQ × AP) - (SQ × SP). 
B) (AQ × AP) - (AQ × SP). 
C) (AQ × SP) - (SQ × SP). 
D) (AQ × AP) - (SQ × SP).

Question 6

A company uses 20,000 pounds of materials for which it paid $6.00 a pound.The materials price variance was $15,000 unfavorable.What is the standard price per pound?

Accepted Answer

A) $0.75 
B) $5.25 
C) $6.00 
D) $6.75 
A) $0.75 
B) $5.25 
C) $6.00 
D) $6.75

Question 7

A total materials variance is analyzed in terms of

Accepted Answer

A) price and quantity variances. 
B) buy and sell variances. 
C) quantity and quality variances. 
D) tight and loose variances. 
A) price and quantity variances. 
B) buy and sell variances. 
C) quantity and quality variances. 
D) tight and loose variances.

Question 8

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 controllable variance is

Accepted Answer

A) $5,000 favorable. 
B) $2,000 favorable. 
C) $10,000 favorable. 
D) $10,000 unfavorable. 
A) $5,000 favorable. 
B) $2,000 favorable. 
C) $10,000 favorable. 
D) $10,000 unfavorable.

Question 9

Inventories cannot be valued at standard cost in financial statements.

Accepted Answer

A) True 
 B)False

Question 10

If the labor quantity variance is unfavorable and the cause is inefficient use of direct labor, the responsibility rests with the

Accepted Answer

A) sales department. 
B) production department. 
C) budget office. 
D) controller's department. 
A) sales department. 
B) production department. 
C) budget office. 
D) controller's department.

Question 11

Normal standards incorporate normal contingencies of production into the standards.

Accepted Answer

A) True 
 B)False

Question 12

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. 
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 13

A managerial accountant
1.	does not participate in the standard setting process.
2.	provides knowledge of cost behaviors in the standard setting process.
3.	provides input of historical costs to the standard setting process.

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 2 and 3 
A) 1 
B) 2 
C) 3 
D) 2 and 3

Question 14

The materials price standard is based on the purchasing department's best estimate of the cost of raw materials.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) the overhead volume variance will be unfavorable. 
B) variable overhead costs will be underapplied. 
C) the overhead controllable variance will be favorable. 
D) variable overhead costs will be overapplied. 
A) the overhead volume variance will be unfavorable. 
B) variable overhead costs will be underapplied. 
C) the overhead controllable variance will be favorable. 
D) variable overhead costs will be overapplied.

Question 16

In Zero Company's income statement, they report actual gross profit of $52,500 and the following variances: $$\begin{array} { l r l } 
\text { Materials price } & \$ 420  \mathrm {~F} \
\text { Materials quantity } & 600  \mathrm {~F} \
\text { Labor price } & 420  \mathrm { U } \
\text { Labor quantity } & 1,000 \mathrm {~F} \
\text { Overhead } & 900 \mathrm {~F}
\end{array}$$ Zero would report gross profit at standard of

Accepted Answer

A) $46,660. 
B) $47,500. 
C) $50,000. 
D) $53,340. 
A) $46,660. 
B) $47,500. 
C) $50,000. 
D) $53,340.

Question 17

In using variance reports, top management normally looks carefully at every variance.

Accepted Answer

A) True 
 B)False

Question 18

Standards may be useful in setting selling prices for finished goods.

Accepted Answer

A) True 
 B)False

Question 19

Which department is usually responsible for a labor price variance attributable to misallocation of workers?

Accepted Answer

A) Quality control 
B) Purchasing 
C) Engineering 
D) Production 
A) Quality control 
B) Purchasing 
C) Engineering 
D) Production

Question 20

A standard differs from a budget because a standard

Accepted Answer

A) is a predetermined cost. 
B) contributes to management planning and control. 
C) is a unit amount. 
D) none of these; a standard does not differ from a budget. 
A) is a predetermined cost. 
B) contributes to management planning and control. 
C) is a unit amount. 
D) none of these; a standard does not differ from a budget.

Allowance for spoilage is part of the direct

The matrix approach to variance analysis

A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $5 per pound.If 12,000 units of product were produced last month and 37,500 pounds of direct materials were used, the direct materials quantity variance was

The formula for the materials quantity variance is

A company uses 20,000 pounds of materials for which it paid $6.00 a pound.The materials price variance was $15,000 unfavorable.What is the standard price per pound?

A total materials variance is analyzed in terms of

Inventories cannot be valued at standard cost in financial statements.

If the labor quantity variance is unfavorable and the cause is inefficient use of direct labor, the responsibility rests with the

Normal standards incorporate normal contingencies of production into the standards.

The total materials variance is equal to the

A managerial accountant 1. does not participate in the standard setting process. 2. provides knowledge of cost behaviors in the standard setting process. 3. provides input of historical costs to the standard setting process.

The materials price standard is based on the purchasing department's best estimate of the cost of raw materials.

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

In Zero Company's income statement, they report actual gross profit of $52,500 and the following variances: Materials price \ 420 Materials quantity 600 Labor price 420 Labor quantity 1,000 Overhead 900 Zero would report gross profit at standard of

In using variance reports, top management normally looks carefully at every variance.

Standards may be useful in setting selling prices for finished goods.

Which department is usually responsible for a labor price variance attributable to misallocation of workers?

A standard differs from a budget because a standard

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

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Exam 11: Reporting and Analyzing Stockholders Equity

Allowance for spoilage is part of the direct

The matrix approach to variance analysis

A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $5 per pound.If 12,000 units of product were produced last month and 37,500 pounds of direct materials were used, the direct materials quantity variance was

The formula for the materials quantity variance is

A company uses 20,000 pounds of materials for which it paid $6.00 a pound.The materials price variance was $15,000 unfavorable.What is the standard price per pound?

A total materials variance is analyzed in terms of

Inventories cannot be valued at standard cost in financial statements.

If the labor quantity variance is unfavorable and the cause is inefficient use of direct labor, the responsibility rests with the

Normal standards incorporate normal contingencies of production into the standards.

The total materials variance is equal to the

A managerial accountant 1. does not participate in the standard setting process. 2. provides knowledge of cost behaviors in the standard setting process. 3. provides input of historical costs to the standard setting process.

The materials price standard is based on the purchasing department's best estimate of the cost of raw materials.

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

In Zero Company's income statement, they report actual gross profit of $52,500 and the following variances: Materials price \ 420 Materials quantity 600 Labor price 420 Labor quantity 1,000 Overhead 900 Zero would report gross profit at standard of

In using variance reports, top management normally looks carefully at every variance.

Standards may be useful in setting selling prices for finished goods.

Which department is usually responsible for a labor price variance attributable to misallocation of workers?

A standard differs from a budget because a standard

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

Filters