Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Monster Company produces a product requiring 3 direct labor hours at $16.00 per hour. During January 2000 products are produced using 6300 direct labor hours. Monster's actual payroll during January was $98280. What is the labor quantity variance?

Accepted Answer

A)  $2280 U 
B)  $4800 F 
C)  $2520 F 
D)  $4800 U 
A)  $2280 U 
B)  $4800 F 
C)  $2520 F 
D)  $4800 U

Question 3

The balanced scorecard approach

Accepted Answer

A)  uses only financial measures to evaluate performance. 
B)  uses rather vague open statements when setting objectives in order to allow managers and employees flexibility. 
C)  normally sets the financial objectives first and then sets the objectives in the other perspectives to accomplish the financial objectives. 
D)  evaluates performance using about 10 different perspectives in order to effectively incorporate all areas of the organization. 
A)  uses only financial measures to evaluate performance. 
B)  uses rather vague open statements when setting objectives in order to allow managers and employees flexibility. 
C)  normally sets the financial objectives first and then sets the objectives in the other perspectives to accomplish the financial objectives. 
D)  evaluates performance using about 10 different perspectives in order to effectively incorporate all areas of the organization.

Question 4

A company uses 40000 gallons of materials for which they paid $7.00 a gallon. The materials price variance was $80000 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 5

If the actual direct labor hours worked is greater than the standard hours the labor quantity variance will be ___________________ and the labor rate variance will be ____________________ if the standard rate of pay is greater than the actual rate of pay.

Accepted Answer

unfavorabl

Question 6

Variances from standards are

Accepted Answer

A)  expressed in total dollars. 
B)  expressed on a per-unit basis. 
C)  expressed on a percentage basis. 
D)  All of these answers are correct. 
A)  expressed in total dollars. 
B)  expressed on a per-unit basis. 
C)  expressed on a percentage basis. 
D)  All of these answers are correct.

Question 7

A company purchases 12000 pounds of materials. The materials price variance is $6000 favorable. What is the difference between the standard and actual price paid for the materials?

Accepted Answer

A)  $1.00 
B)  $.50 
C)  $2.00 
D)  $6.00 
A)  $1.00 
B)  $.50 
C)  $2.00 
D)  $6.00

Question 8

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 labor rate per hour is

Accepted Answer

A)  $ 12.00. 
B)  $ 12.30. 
C)  $15.60. 
D)  $15.90. 
A)  $ 12.00. 
B)  $ 12.30. 
C)  $15.60. 
D)  $15.90.

Question 9

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 10

The overhead controllable variance is the difference between the

Accepted Answer

A)  budgeted overhead based on standard hours allowed and the overhead applied to production. 
B)  budgeted overhead based on standard hours allowed and budgeted overhead based on actual hours worked. 
C)  actual overhead and the overhead applied to production. 
D)  actual overhead and budgeted overhead based on standard hours allowed. 
A)  budgeted overhead based on standard hours allowed and the overhead applied to production. 
B)  budgeted overhead based on standard hours allowed and budgeted overhead based on actual hours worked. 
C)  actual overhead and the overhead applied to production. 
D)  actual overhead and budgeted overhead based on standard hours allowed.

Question 11

The formula for computing the overhead volume variance is

Accepted Answer

A)  fixed overhead rate times (actual hours less standard hours allowed). 
B)  variable overhead rate times (actual hours less standard hours allowed). 
C)  fixed overhead rate times (normal capacity hours less standard hours allowed). 
D)  variable overhead rate times (normal capacity hours less standard hours allowed). 
A)  fixed overhead rate times (actual hours less standard hours allowed). 
B)  variable overhead rate times (actual hours less standard hours allowed). 
C)  fixed overhead rate times (normal capacity hours less standard hours allowed). 
D)  variable overhead rate times (normal capacity hours less standard hours allowed).

Question 12

The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month 11200 gallons of direct materials that actually cost $42400 were used to produce 6000 units of product. The direct materials quantity variance for last month was

Accepted Answer

A)  $3200 favorable. 
B)  $2400 favorable. 
C)  $3200 unfavorable. 
D)  $5600 unfavorable. 
A)  $3200 favorable. 
B)  $2400 favorable. 
C)  $3200 unfavorable. 
D)  $5600 unfavorable.

Question 13

Match between columns
                        Premises: The difference between actual overhead incurred and overhead budgeted for the standard hours allowed.
The hours that should have been worked for the units produced.
The difference between the actual quantity times the actual price and the actual quantity times the standard price.
The difference between total actual costs and total standard costs.
The difference between actual hours times the standard rate and standard hours times the standard rate.
Predetermined unit costs that are measures of performance.
The difference between normal capacity hours and standard hours allowed times the fixed overhead rate.
Standards based on an efficient level of performance that are attainable under expected operating conditions.
Standards based on the optimum level of performance under perfect operating conditions.
A double-entry system of accounting in which standard costs are used in making entries and variances are recognized in the accounts.

Accepted Answer

The Answer of Variances and Standard costs and Standard cost is...

Question 14

Flagstaff Inc. uses standard costing for its one product baseball bats. The standards call for 3 board-feet of wood at $1.40 per board-foot and 45 minutes of work at $12 per hour per bat. Total manufacturing overhead costs were estimated at $9450 of which the variable portion was $0.50 per bat and the fixed portion was $1.00 per bat with an estimate of 6300 bats to be produced. Flagstaff identifies price variances at the earliest possible point in time.
During March the company had the following results:
Direct labor used = 4800 hours at a cost of $56400
Actual manufacturing overhead fixed costs = $6000
Actual manufacturing overhead variable costs = $3100
Bats produced = 6000
Instructions
Compute the following variances for March.
1. Labor quantity variance
2. Total labor variance
3. Overhead controllable variance
4. Overhead volume variance

Accepted Answer

1. Labor quantity variance @#LAT-DLM& (Actual hou

Question 15

An advantage of standard costs is that they simplify costing of inventories and reduce clerical costs.

Accepted Answer

A) True 
 B)False

Question 16

A standard cost is

Accepted Answer

A)  a cost which is paid for a group of similar products. 
B)  the average cost in an industry. 
C)  a predetermined cost. 
D)  the historical cost of producing a product last year. 
A)  a cost which is paid for a group of similar products. 
B)  the average cost in an industry. 
C)  a predetermined cost. 
D)  the historical cost of producing a product last year.

Question 17

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

Question 18

Standard cost cards are the subsidiary ledger for the Work in Process account in a standard cost system.

Accepted Answer

A) True 
 B)False

Question 19

The use of an inexperienced worker instead of an experienced employee can result in a favorable labor price variance but probably an unfavorable quantity variance.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements about overhead variances is false?

Accepted Answer

A)  Standard hours allowed are used in calculating the controllable variance. 
B)  Standard hours allowed are used in calculating the volume variance. 
C)  The controllable variance pertains solely to fixed costs. 
D)  The total overhead variance pertains to both variable and fixed costs. 
A)  Standard hours allowed are used in calculating the controllable variance. 
B)  Standard hours allowed are used in calculating the volume variance. 
C)  The controllable variance pertains solely to fixed costs. 
D)  The total overhead variance pertains to both variable and fixed costs.

Exam 25: Standard Costs and Balanced Scorecard

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

Monster Company produces a product requiring 3 direct labor hours at $16.00 per hour. During January 2000 products are produced using 6300 direct labor hours. Monster's actual payroll during January was $98280. What is the labor quantity variance?

The balanced scorecard approach

A company uses 40000 gallons of materials for which they paid $7.00 a gallon. The materials price variance was $80000 favorable. What is the standard price per gallon?

If the actual direct labor hours worked is greater than the standard hours the labor quantity variance will be ___________________ and the labor rate variance will be ____________________ if the standard rate of pay is greater than the actual rate of pay.

Variances from standards are

A company purchases 12000 pounds of materials. The materials price variance is $6000 favorable. What is the difference between the standard and actual price paid for the materials?

A total materials variance is analyzed in terms of

The overhead controllable variance is the difference between the

The formula for computing the overhead volume variance is

The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month 11200 gallons of direct materials that actually cost $42400 were used to produce 6000 units of product. The direct materials quantity variance for last month was

An advantage of standard costs is that they simplify costing of inventories and reduce clerical costs.

A standard cost is

The two levels that standards may be set at are

Standard cost cards are the subsidiary ledger for the Work in Process account in a standard cost system.

The use of an inexperienced worker instead of an experienced employee can result in a favorable labor price variance but probably an unfavorable quantity variance.

Which of the following statements about overhead variances is false?

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

If the actual direct labor hours worked is greater than the standard hours the labor quantity variance will be _ and the labor rate variance will be __ if the standard rate of pay is greater than the actual rate of pay.