Question 1

If a company incurs direct labor cost of $82,000 when the standard cost is $84,000, it will

Accepted Answer

A) debit Labor Price Variance for $2,000. 
B) credit Labor Price Variance for $2,000. 
C) debit Labor Quantity Variance for $2,000. 
D) credit Labor Quantity Variance for $2,000. 
A) debit Labor Price Variance for $2,000. 
B) credit Labor Price Variance for $2,000. 
C) debit Labor Quantity Variance for $2,000. 
D) credit Labor Quantity Variance for $2,000.

Question 2

The most rigorous of all standards is the

Accepted Answer

A) normal standard. 
B) realistic standard. 
C) ideal standard. 
D) conceivable standard. 
A) normal standard. 
B) realistic standard. 
C) ideal standard. 
D) conceivable standard.

Question 3

The use of standard costs in inventory costing is prohibited in financial statements.

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 quantity variance is

Accepted Answer

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

Question 5

The total overhead variance is the difference between the

Accepted Answer

A) actual overhead costs and overhead costs applied based on standard hours allowed. 
B) actual overhead costs and overhead costs applied based on actual hours. 
C) overhead costs applied based on actual hours and overhead costs applied based on standard hours allowed. 
D) the actual overhead costs and the standard direct labor costs. 
A) actual overhead costs and overhead costs applied based on standard hours allowed. 
B) actual overhead costs and overhead costs applied based on actual hours. 
C) overhead costs applied based on actual hours and overhead costs applied based on standard hours allowed. 
D) the actual overhead costs and the standard direct labor costs.

Question 6

Parnell Company prepared its income statement for internal use.How would amounts for cost of goods sold and variances appear?

Accepted Answer

A) Cost of goods sold would be at actual costs, and variances would be reported separately. 
B) Cost of goods sold would be combined with the variances, and the net amount reported at standard cost. 
C) Cost of goods sold would be at standard costs, and variances would be reported separately. 
D) Cost of goods sold would be combined with the variances, and the net amount reported at actual cost. 
A) Cost of goods sold would be at actual costs, and variances would be reported separately. 
B) Cost of goods sold would be combined with the variances, and the net amount reported at standard cost. 
C) Cost of goods sold would be at standard costs, and variances would be reported separately. 
D) Cost of goods sold would be combined with the variances, and the net amount reported at actual cost.

Question 7

The materials price variance is normally caused by the production department.

Accepted Answer

A) True 
 B)False

Question 8

The standard predetermined overhead rate must be based on direct labor hours as the standard activity index.

Accepted Answer

A) True 
 B)False

Question 9

If actual costs are greater than standard costs, there is a(n)

Accepted Answer

A) normal variance. 
B) unfavorable variance. 
C) favorable variance. 
D) error in the accounting system. 
A) normal variance. 
B) unfavorable variance. 
C) favorable variance. 
D) error in the accounting system.

Question 10

The following information was taken from the annual manufacturing overhead cost budget of Fergie Manufacturing. $\begin{array}{lr}
\text { Variable manufacturing overhead costs } & \$ 92,400 \
\text { Fixed manufacturing overhead costs } & \$ 55,440 \
\text { Normal production level in labor hours } & 30,800 \
\text { Normal production level in units } & 5,775 \
\text { Standard labor hours per unit } & 4
\end{array}$ During the year, 5,600 units were produced, 18,340 hours were worked, and the actual manufacturing overhead was $151,200.Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs.Overhead is applied on the basis of direct labor hours.Fergie's total overhead rate is

Accepted Answer

A) $2.40. 
B) $4.00. 
C) $6.40. 
D) $6.53. 
A) $2.40. 
B) $4.00. 
C) $6.40. 
D) $6.53.

Question 11

A company uses 40,000 gallons of materials for which they paid $7.00 a gallon.The materials price variance was $80,000 favorable. What is the standard price per gallon?

Accepted Answer

A) $2 
B) $5 
C) $7 
D) $9 
A) $2 
B) $5 
C) $7 
D) $9

Question 12

Edgar, Inc.has a materials price standard of $2.00 per pound.Six thousand pounds of materials were purchased at $2.20 a pound.The actual quantity of materials used was 6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds. Edgar, Inc.'s total materials variance is

Accepted Answer

A) $2,400 U. 
B) $2,400 F. 
C) $2,520 U. 
D) $2,520 F. 
A) $2,400 U. 
B) $2,400 F. 
C) $2,520 U. 
D) $2,520 F.

Question 13

An overhead 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. 
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 14

The overhead volume variance relates only to fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 15

A company uses 8,400 pounds of materials and exceeds the standard by 300 pounds.The quantity variance is $1,800 unfavorable.What is the standard price?

Accepted Answer

A) $2 
B) $4 
C) $6 
D) Cannot be determined from the data provided. 
A) $2 
B) $4 
C) $6 
D) Cannot be determined from the data provided.

Question 16

Budgeted overhead for Haft, Inc.at normal capacity of 60,000 direct labor hours is $3 per hour variable and $2 per hour fixed. In May, $310,000 of overhead was incurred in working 63,000 hours when 64,000 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 17

Which of the following statements is false?

Accepted Answer

A) A standard cost is more accurate than a budgeted cost. 
B) A standard is a unit amount. 
C) In concept, standards and budgets are essentially the same. 
D) The standard cost of a product is equivalent to the budgeted cost per unit of product. 
A) A standard cost is more accurate than a budgeted cost. 
B) A standard is a unit amount. 
C) In concept, standards and budgets are essentially the same. 
D) The standard cost of a product is equivalent to the budgeted cost per unit of product.

Question 18

The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $20.Last month, 15,000 units were produced and 73,500 direct labor hours were actually worked at a total cost of $1,350,000.The direct labor quantity variance was

Accepted Answer

A) $30,000 unfavorable. 
B) $45,000 unfavorable. 
C) $45,000 favorable. 
D) $30,000 favorable. 
A) $30,000 unfavorable. 
B) $45,000 unfavorable. 
C) $45,000 favorable. 
D) $30,000 favorable.

Question 19

A credit to a Materials Quantity Variance account indicates that the actual quantity of direct materials used was greater than the standard quantity of direct materials allowed.

Accepted Answer

A) True 
 B)False

Question 20

Standards based on the optimum level of performance under perfect operating conditions are

Accepted Answer

A) attainable standards. 
B) ideal standards. 
C) normal standards. 
D) practical standards. 
A) attainable standards. 
B) ideal standards. 
C) normal standards. 
D) practical standards.

If a company incurs direct labor cost of $82,000 when the standard cost is $84,000, it will

The most rigorous of all standards is the

The use of standard costs in inventory costing is prohibited in financial statements.

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 quantity variance is

The total overhead variance is the difference between the

Parnell Company prepared its income statement for internal use.How would amounts for cost of goods sold and variances appear?

The materials price variance is normally caused by the production department.

The standard predetermined overhead rate must be based on direct labor hours as the standard activity index.

If actual costs are greater than standard costs, there is a(n)

A company uses 40,000 gallons of materials for which they paid $7.00 a gallon.The materials price variance was $80,000 favorable. What is the standard price per gallon?

Edgar, Inc.has a materials price standard of $2.00 per pound.Six thousand pounds of materials were purchased at $2.20 a pound.The actual quantity of materials used was 6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds. Edgar, Inc.'s total materials variance is

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

The overhead volume variance relates only to fixed overhead costs.

A company uses 8,400 pounds of materials and exceeds the standard by 300 pounds.The quantity variance is $1,800 unfavorable.What is the standard price?

Budgeted overhead for Haft, Inc.at normal capacity of 60,000 direct labor hours is $3 per hour variable and $2 per hour fixed. In May, $310,000 of overhead was incurred in working 63,000 hours when 64,000 standard hours were allowed. The overhead controllable variance is

Which of the following statements is false?

The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $20.Last month, 15,000 units were produced and 73,500 direct labor hours were actually worked at a total cost of $1,350,000.The direct labor quantity variance was

A credit to a Materials Quantity Variance account indicates that the actual quantity of direct materials used was greater than the standard quantity of direct materials allowed.

Standards based on the optimum level of performance under perfect operating conditions are

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

If a company incurs direct labor cost of $82,000 when the standard cost is $84,000, it will

The most rigorous of all standards is the

The use of standard costs in inventory costing is prohibited in financial statements.

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 quantity variance is

The total overhead variance is the difference between the

Parnell Company prepared its income statement for internal use.How would amounts for cost of goods sold and variances appear?

The materials price variance is normally caused by the production department.

The standard predetermined overhead rate must be based on direct labor hours as the standard activity index.

If actual costs are greater than standard costs, there is a(n)

A company uses 40,000 gallons of materials for which they paid $7.00 a gallon.The materials price variance was $80,000 favorable. What is the standard price per gallon?

Edgar, Inc.has a materials price standard of $2.00 per pound.Six thousand pounds of materials were purchased at $2.20 a pound.The actual quantity of materials used was 6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds. Edgar, Inc.'s total materials variance is

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

The overhead volume variance relates only to fixed overhead costs.

A company uses 8,400 pounds of materials and exceeds the standard by 300 pounds.The quantity variance is $1,800 unfavorable.What is the standard price?

Budgeted overhead for Haft, Inc.at normal capacity of 60,000 direct labor hours is $3 per hour variable and $2 per hour fixed. In May, $310,000 of overhead was incurred in working 63,000 hours when 64,000 standard hours were allowed. The overhead controllable variance is

Which of the following statements is false?

The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $20.Last month, 15,000 units were produced and 73,500 direct labor hours were actually worked at a total cost of $1,350,000.The direct labor quantity variance was

A credit to a Materials Quantity Variance account indicates that the actual quantity of direct materials used was greater than the standard quantity of direct materials allowed.

Standards based on the optimum level of performance under perfect operating conditions are

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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