Question 1

Ideal standards will generally result in favorable variances for the company.

Accepted Answer

A) True 
 B)False

Question 2

The budgeted overhead costs for standard hours allowed and the overhead costs applied to the product are the same amount

Accepted Answer

A)  for both variable and fixed overhead costs. 
B)  only when standard hours allowed are less than normal capacity. 
C)  for variable overhead costs. 
D)  for fixed overhead costs. 
A)  for both variable and fixed overhead costs. 
B)  only when standard hours allowed are less than normal capacity. 
C)  for variable overhead costs. 
D)  for fixed overhead costs.

Question 3

Budgeted overhead for Mengotti Company at normal capacity of 30,000 direct labor hours is $4.50 per hour variable and $3 per hour fixed. In May, $232,500 of overhead was incurred in working 31,500 hours when 32,000 standard hours were allowed. The overhead controllable variance is

Accepted Answer

A)  $3,750 favorable. 
B)  $1,500 favorable. 
C)  $7,500 favorable. 
D)  $7,500 unfavorable. 
A)  $3,750 favorable. 
B)  $1,500 favorable. 
C)  $7,500 favorable. 
D)  $7,500 unfavorable.

Question 4

Actual costs that vary from standard costs always indicate inefficiencies.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Standard costs may be incorporated into the accounts in the general ledger.

Accepted Answer

A) True 
 B)False

Question 7

The investigation of a materials quantity variance usually begins in the

Accepted Answer

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

Question 8

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 9

Hurley, Inc. manufactures widgets for distribution. The standard costs for the manufacture of widgets follow:
Budgeted factory overhead was $320,000. Overhead applied is based on widgets produced. The company estimated that 5,000 widgets would be produced; however, only 4,800 were produced.
Instructions
Calculate the following amounts.
1. Rate at which total factory overhead is applied
2. Materials price variance
3. Total materials variance
4. Overhead volume variance
5. Overhead controllable variance

Accepted Answer

1. Budgeted overhead cost/budgeted activ

Question 10

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 11

The standard number of hours allowed times the predetermined overhead rate is the amount of ________________ to the products produced.

Accepted Answer

The answer of The standard number of hours allowed times...

Question 12

A company uses 20,000 pounds of materials for which it paid $6.00 a pound. The materials price variance was $30,000 unfavorable. What is the standard price per pound?

Accepted Answer

A)  $1.50 
B)  $4.50 
C)  $6.00 
D)  $7.50 
A)  $1.50 
B)  $4.50 
C)  $6.00 
D)  $7.50

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The following information was taken from the annual manufacturing overhead cost budget of Coen Company.   During the year, 5,600 units were produced, 18,340 hours were worked, and the actual manufacturing overhead was $75,600. Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours. Coen's controllable overhead variance is

Accepted Answer

A)  $840 U. 
B)  $3,080 U. 
C)  $3,920 U. 
D)  $11,200 U. 
A)  $840 U. 
B)  $3,080 U. 
C)  $3,920 U. 
D)  $11,200 U.

Question 15

Normal standards should be rigorous but attainable.

Accepted Answer

A) True 
 B)False

Question 16

If a company is concerned with the potential negative effects of establishing standards, it should

Accepted Answer

A)  set loose standards that are easy to fulfill. 
B)  offer wage incentives to those meeting standards. 
C)  not employ any standards. 
D)  set tight standards in order to motivate people. 
A)  set loose standards that are easy to fulfill. 
B)  offer wage incentives to those meeting standards. 
C)  not employ any standards. 
D)  set tight standards in order to motivate people.

Question 17

Using the data in BE 164 and BE 165, compute the manufacturing overhead volume variance. Normal capacity was 50,000 direct labor hours.

Accepted Answer

Fixed Overhead Rate × (Normal

Question 18

The overhead controllable variance is the difference between the actual overhead costs incurred and the budgeted costs for the standard hours allowed.

Accepted Answer

A) True 
 B)False

Question 19

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 20

A company developed the following per-unit standards for its product: 2 pounds of direct materials at $4 per pound. Last month, 1,000 pounds of direct materials were purchased for $3,800. The direct materials price variance for last month was

Accepted Answer

A)  $3,800 favorable. 
B)  $200 favorable. 
C)  $100 favorable. 
D)  $200 unfavorable. 
A)  $3,800 favorable. 
B)  $200 favorable. 
C)  $100 favorable. 
D)  $200 unfavorable.

Exam 25: Budgetary Control and Responsibility Accounting

Ideal standards will generally result in favorable variances for the company.

The budgeted overhead costs for standard hours allowed and the overhead costs applied to the product are the same amount

Budgeted overhead for Mengotti Company at normal capacity of 30,000 direct labor hours is $4.50 per hour variable and $3 per hour fixed. In May, $232,500 of overhead was incurred in working 31,500 hours when 32,000 standard hours were allowed. The overhead controllable variance is

Actual costs that vary from standard costs always indicate inefficiencies.

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

Standard costs may be incorporated into the accounts in the general ledger.

The investigation of a materials quantity variance usually begins in the

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.

Allowance for spoilage is part of the direct

The standard number of hours allowed times the predetermined overhead rate is the amount of ________________ to the products produced.

A company uses 20,000 pounds of materials for which it paid $6.00 a pound. The materials price variance was $30,000 unfavorable. What is the standard price per pound?

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

Normal standards should be rigorous but attainable.

If a company is concerned with the potential negative effects of establishing standards, it should

Using the data in BE 164 and BE 165, compute the manufacturing overhead volume variance. Normal capacity was 50,000 direct labor hours.

The overhead controllable variance is the difference between the actual overhead costs incurred and the budgeted costs for the standard hours allowed.

The overhead controllable variance is the difference between the

A company developed the following per-unit standards for its product: 2 pounds of direct materials at $4 per pound. Last month, 1,000 pounds of direct materials were purchased for $3,800. The direct materials price variance for last month was

Accounting in Action

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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 Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Standard Costs and Balanced Scorecard

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