Question 1

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 2

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 3

The purchasing agent of the Aldrich Company 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 4

The customer perspective of the balanced scorecard approach

Accepted Answer

A)  is the most traditional view of the company. 
B)  evaluates the internal operating processes critical to the success of the organization. 
C)  evaluates how well the company develops and retains its employees. 
D)  evaluates how well the company is performing from the viewpoint of those people who buy its products and services. 
A)  is the most traditional view of the company. 
B)  evaluates the internal operating processes critical to the success of the organization. 
C)  evaluates how well the company develops and retains its employees. 
D)  evaluates how well the company is performing from the viewpoint of those people who buy its products and services.

Question 5

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 6

Presented below is a flexible manufacturing budget for Jacob Company, which manufactures fine timepieces:
Activity Index:
The company applies the overhead on the basis of direct labor hours at $7.00 per direct labor hour and the standard hours per timepiece is 1/2 hour each. The company's actual production was 5,800 timepieces with 2,900 actual hours of direct labor. Actual overhead was $21,200.
Instructions
(a) Compute the controllable and volume overhead variances.
(b) Prepare the entries for manufacturing overhead during the period and the entry to recognize the overhead variances at the end of the period.

Accepted Answer

The answer of Presented below is a flexible manufacturing budget...

Question 7

The direct materials quantity standard would not be expressed in

Accepted Answer

A)  pounds. 
B)  barrels. 
C)  dollars. 
D)  board feet. 
A)  pounds. 
B)  barrels. 
C)  dollars. 
D)  board feet.

Question 8

The standard rate of pay is $10 per direct labor hour. If the actual direct labor payroll was $39,200 for 4,000 direct labor hours worked, the direct labor price (rate) variance is

Accepted Answer

A)  $800 unfavorable. 
B)  $800 favorable. 
C)  $1,000 unfavorable. 
D)  $1,000 favorable. 
A)  $800 unfavorable. 
B)  $800 favorable. 
C)  $1,000 unfavorable. 
D)  $1,000 favorable.

Question 9

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 10

Which one of the following statements is true?

Accepted Answer

A)  If the materials price variance is unfavorable, then the materials quantity variance must also be unfavorable. 
B)  If the materials price variance is unfavorable, then the materials quantity variance must be favorable. 
C)  Price and quantity variances move in the same direction. If one is favorable, the others will be as well. 
D)  There is no correlation of favorable or unfavorable for price and quantity variances. 
A)  If the materials price variance is unfavorable, then the materials quantity variance must also be unfavorable. 
B)  If the materials price variance is unfavorable, then the materials quantity variance must be favorable. 
C)  Price and quantity variances move in the same direction. If one is favorable, the others will be as well. 
D)  There is no correlation of favorable or unfavorable for price and quantity variances.

Question 11

The final decision as to what standard costs should be is the responsibility of

Accepted Answer

A)  the quality control engineer. 
B)  the managerial accountants. 
C)  the purchasing agent. 
D)  management. 
A)  the quality control engineer. 
B)  the managerial accountants. 
C)  the purchasing agent. 
D)  management.

Question 12

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.

Question 13

Which of the following is not considered an advantage of using standard costs?

Accepted Answer

A)  Standard costs can reduce clerical costs. 
B)  Standard costs can be useful in setting prices for finished goods. 
C)  Standard costs can be used as a means of finding fault with performance. 
D)  Standard costs can make employees "cost-conscious." 
A)  Standard costs can reduce clerical costs. 
B)  Standard costs can be useful in setting prices for finished goods. 
C)  Standard costs can be used as a means of finding fault with performance. 
D)  Standard costs can make employees "cost-conscious."

Question 14

A company purchases 15,000 pounds of materials. The materials price variance is $6,000 favorable. What is the difference between the standard and actual price paid for the materials?

Accepted Answer

A)  $2.00 
B)  $.40 
C)  $2.50 
D)  $10.00 
A)  $2.00 
B)  $.40 
C)  $2.50 
D)  $10.00

Question 15

Gamblian Company's standard labor cost of producing one unit of product is 2 hours at the rate of $14.00 per hour. During February, 39,000 hours of labor are incurred at a cost of $13.80 per hour to produce 19,000 units of product.
Instructions
(a) Compute the labor price and labor quantity variances.
(b) Journalize the incurrence of the labor costs and the assignment of direct labor to production, assuming a standard cost system is used.

Accepted Answer

The answer of Gamblian Company's standard labor cost of producing...

Question 16

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

Accepted Answer

A)  cannot be calculated. 
B)  will be favorable. 
C)  will be unfavorable. 
D)  will be greater than the controllable variance. 
A)  cannot be calculated. 
B)  will be favorable. 
C)  will be unfavorable. 
D)  will be greater than the controllable variance.

Question 17

The standard rate of pay is $15 per direct labor hour. If the actual direct labor payroll was $88,200 for 6,000 direct labor hours worked, the direct labor price (rate) variance is

Accepted Answer

A)  $1,800 unfavorable. 
B)  $1,800 favorable. 
C)  $2,250 unfavorable. 
D)  $2,250 favorable. 
A)  $1,800 unfavorable. 
B)  $1,800 favorable. 
C)  $2,250 unfavorable. 
D)  $2,250 favorable.

Question 18

If standard costs are incorporated into the accounting system,

Accepted Answer

A)  it may simplify the costing of inventories and reduce clerical costs. 
B)  it can eliminate the need for the budgeting process. 
C)  the accounting system will produce information which is less relevant than the historical cost accounting system. 
D)  approval of the shareholders is required. 
A)  it may simplify the costing of inventories and reduce clerical costs. 
B)  it can eliminate the need for the budgeting process. 
C)  the accounting system will produce information which is less relevant than the historical cost accounting system. 
D)  approval of the shareholders is required.

Question 19

Match the items in the two columns below by entering the appropriate code letter in the space provided.
A. Variances F. Materials price variance
B. Standard costs G. Labor quantity variance
C. Standard cost accounting system H. Overhead controllable variance
D. Normal standards I. Overhead volume variance
E. Ideal standards J. Standard hours allowed
____ 1. The difference between actual overhead incurred and overhead budgeted for the standard hours allowed.
____ 2. The hours that should have been worked for the units produced.
____ 3. The difference between the actual quantity times the actual price and the actual quantity times the standard price.
____ 4. The difference between total actual costs and total standard costs.
____ 5. The difference between actual hours times the standard rate and standard hours times the standard rate.
____ 6. Predetermined unit costs that are measures of performance.
____ 7. The difference between normal capacity hours and standard hours allowed times the fixed overhead rate.
____ 8. Standards based on an efficient level of performance that are attainable under expected operating conditions.
____ 9. Standards based on the optimum level of performance under perfect operating conditions.
____ 10. A double-entry system of accounting in which standard costs are used in making entries and variances are recognized in the accounts.

Accepted Answer

1. H 6. B
2. J 7. I

Question 20

Markowitz Corporation prepared the following variance report.   
Instructions
Fill in the appropriate amounts or letters for the question marks in the report.

Accepted Answer

@#IMG-DLM& 24,000 = $6,000/($5.25 - $5.0

Exam 25: Budgetary Control and Responsibility Accounting

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

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

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

The customer perspective of the balanced scorecard approach

A total materials variance is analyzed in terms of

The direct materials quantity standard would not be expressed in

The standard rate of pay is $10 per direct labor hour. If the actual direct labor payroll was $39,200 for 4,000 direct labor hours worked, the direct labor price (rate) variance is

The formula for the materials quantity variance is

Which one of the following statements is true?

The final decision as to what standard costs should be is the responsibility of

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

Which of the following is not considered an advantage of using standard costs?

A company purchases 15,000 pounds of materials. The materials price variance is $6,000 favorable. What is the difference between the standard and actual price paid for the materials?

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

The standard rate of pay is $15 per direct labor hour. If the actual direct labor payroll was $88,200 for 6,000 direct labor hours worked, the direct labor price (rate) variance is

If standard costs are incorporated into the accounting system,

Markowitz Corporation prepared the following variance report. Instructions Fill in the appropriate amounts or letters for the question marks in the report.

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 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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