Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

When is a variance considered to be 'material'?

Accepted Answer

A)  When it is large compared to the actual cost 
B)  When it is infrequent 
C)  When it is unfavorable 
D)  When it could have been controlled more effectively 
A)  When it is large compared to the actual cost 
B)  When it is infrequent 
C)  When it is unfavorable 
D)  When it could have been controlled more effectively

Question 3

In developing a standard cost for direct materials used in making a product consideration should be given to two factors: (1) __________________ per unit of direct materials and (2) the __________________ of direct materials to produce one unit of product.

Accepted Answer

The answer of In developing a standard cost for direct...

Question 4

What are the four perspectives used in the balanced scorecard? Discuss the nature of each and how the perspectives are linked.

Accepted Answer

The four perspectives of the balanced sc

Question 5

In reporting variances

Accepted Answer

A)  promptness is relatively unimportant. 
B)  management normally investigates all variances. 
C)  the reports should facilitate management by exception. 
D)  the reports are not departmentalized. 
A)  promptness is relatively unimportant. 
B)  management normally investigates all variances. 
C)  the reports should facilitate management by exception. 
D)  the reports are not departmentalized.

Question 6

Vincent Bassani has come to the accounting department for help in interpreting his variance report. He says that he understands that last month was not a very good one for output but he really thought everyone put forth good effort so he is confused about the existence of an unfavorable labor efficiency variance. He cites as an example of the workers' effort their willingness to work extra hours to get full output even when a whole week's worth of production had to be scrapped. He knew that his materials costs would be higher and that overtime would make his rate variance unfavorable but he certainly didn't think his workers had been inefficient.
Required:
Write a short note to Vincent explaining the probable cause of the unfavorable labor efficiency variance.

Accepted Answer

The answer of Vincent Bassani has come to the accounting...

Question 7

What is a standard cost?

Accepted Answer

A)  The total number of units times the budgeted amount expected 
B)  Any amount that appears on a budget 
C)  The total amount that appears on the budget for product costs 
D)  The amount management thinks should be incurred to produce a good or service 
A)  The total number of units times the budgeted amount expected 
B)  Any amount that appears on a budget 
C)  The total amount that appears on the budget for product costs 
D)  The amount management thinks should be incurred to produce a good or service

Question 8

Labor efficiency is measured by the

Accepted Answer

A)  materials quantity variance. 
B)  total labor variance. 
C)  labor quantity variance. 
D)  labor rate variance. 
A)  materials quantity variance. 
B)  total labor variance. 
C)  labor quantity variance. 
D)  labor rate variance.

Question 9

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 5600 units were produced 18340 hours were worked and the actual manufacturing overhead was $151200. Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours.
- Fergie's controllable overhead variance is

Accepted Answer

A)  $1680 U. 
B)  $6160 U. 
C)  $7840 U. 
D)  $22400 U. 
A)  $1680 U. 
B)  $6160 U. 
C)  $7840 U. 
D)  $22400 U.

Question 10

Marburg Co. expects direct materials cost of $6 per unit for 100000 units (a total of $600000 of direct materials costs). Marburg's standard direct materials cost and budgeted direct materials cost is $\begin{array} { l c c } 
&& \text { Standard } &&&&& \text { Budgeted } \\end{array}$
A) $\begin{array} { l c c } & \$ 6 \text { per unit } &&&& \$ 600,000 \text { per year } \\end{array}$
B)$\begin{array} { l c c } & \$ 6 \text { per unit } &&&& \$ 6 \text { per unit } \\end{array}$
C) $\begin{array} { l c c } & \$ 600,000 \text { per year } & \$ 6 \text { per unit } \\end{array}$
D) $\begin{array} { l c c } & \$ 600,000 \text { per year } & \$ 600,000 \text { per year }
\end{array}$

Accepted Answer

The answer of Marburg Co. expects direct materials cost of...

Question 11

A company purchases 20000 pounds of materials. The materials price variance is $4000 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. 
A)  $1.00 
B)  $0.20 
C)  $5.00 
D)  Cannot be determined from the data provided.

Question 12

A standard which represents an efficient level of performance that is attainable under expected operating conditions is called a(n)

Accepted Answer

A)  ideal standard. 
B)  loose standard. 
C)  tight standard. 
D)  normal standard. 
A)  ideal standard. 
B)  loose standard. 
C)  tight standard. 
D)  normal standard.

Question 13

The investigation of materials price variance usually begins in the

Accepted Answer

A)  first production department. 
B)  purchasing department. 
C)  controller's office. 
D)  accounts payable department. 
A)  first production department. 
B)  purchasing department. 
C)  controller's office. 
D)  accounts payable department.

Question 14

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 15

A standard cost system may be used in $\begin{array} { l c c } 
& \text { Job Order Costing } & \text { Process Costing } \\end{array}$
A)$\begin{array} { l c c } &&&& \text { No } &&&&&& \text { No } \\end{array}$
B)$\begin{array} { l c c }  &&&& \text { Yes } &&&&&& \text { No } \\end{array}$
C)$\begin{array} { l c c }  &&&& \text { No } &&&&&& \text { Yes } \\end{array}$
D)$\begin{array} { l c c } &&&& \text { Yes } &&&&&& \text { Yes }
\end{array}$

Accepted Answer

The answer of A standard cost system may be used...

Question 16

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. 
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 17

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 18

The purchasing agent of the Poplin Inc. ordered materials of lower quality in an effort to economize on price. What variance will most likely result?

Accepted Answer

A)  Favorable materials quantity variance 
B)  Favorable total materials variance 
C)  Unfavorable materials price variance 
D)  Unfavorable labor quantity variance 
A)  Favorable materials quantity variance 
B)  Favorable total materials variance 
C)  Unfavorable materials price variance 
D)  Unfavorable labor quantity variance

Question 19

Inventories cannot be valued at standard cost in financial statements.

Accepted Answer

A) True 
 B)False

Question 20

The overhead volume variance relates only to fixed overhead costs.

Accepted Answer

A) True 
 B)False

Exam 25: Standard Costs and Balanced Scorecard

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

When is a variance considered to be 'material'?

In developing a standard cost for direct materials used in making a product consideration should be given to two factors: (1) __________________ per unit of direct materials and (2) the __________________ of direct materials to produce one unit of product.

What are the four perspectives used in the balanced scorecard? Discuss the nature of each and how the perspectives are linked.

In reporting variances

What is a standard cost?

Labor efficiency is measured by the

A company purchases 20000 pounds of materials. The materials price variance is $4000 favorable. What is the difference between the standard and actual price paid for the materials?

A standard which represents an efficient level of performance that is attainable under expected operating conditions is called a(n)

The investigation of materials price variance usually begins in the

Which of the following statements is false?

A standard cost system may be used in Job Order Costing Process Costing A) No No B) Yes No C) No Yes D) Yes Yes

Ideal standards

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

The purchasing agent of the Poplin Inc. ordered materials of lower quality in an effort to economize on price. What variance will most likely result?

Inventories cannot be valued at standard cost in financial statements.

The overhead volume variance relates only to fixed overhead costs.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Incremental Analysis and Capital Budgeting

Time Value of Money

Filters

In developing a standard cost for direct materials used in making a product consideration should be given to two factors: (1) per unit of direct materials and (2) the of direct materials to produce one unit of product.