Question 1

The total budget variance is the difference between the actual cost of the input and its actual cost.

Accepted Answer

A) True 
 B)False

Question 2

Which statement is characteristic of currently attainable standards?

Accepted Answer

A)  They are challenging and not achievable. 
B)  They can be achieved under efficient operating conditions. 
C)  They tend to achieve lower performance levels from personnel. 
D)  No allowance is made for normal breakdowns, interruptions, etc. 
A)  They are challenging and not achievable. 
B)  They can be achieved under efficient operating conditions. 
C)  They tend to achieve lower performance levels from personnel. 
D)  No allowance is made for normal breakdowns, interruptions, etc.

Question 3

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Actual usage of inputs is greater than the standard usage.

Accepted Answer

A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards 
A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards

Question 4

Which statement best describes the material price variance?

Accepted Answer

A)  It is the difference between the actual and standard unit price of an input multiplied by the number of inputs used. 
B)  It is the difference between the actual and standard unit price of an output multiplied by the number of inputs used. 
C)  It is the difference between the actual and standard unit price of an input multiplied by the number of inputs purchased. 
D)  It is the difference between the actual and standard unit price of an output multiplied by the number of inputs purchased. 
A)  It is the difference between the actual and standard unit price of an input multiplied by the number of inputs used. 
B)  It is the difference between the actual and standard unit price of an output multiplied by the number of inputs used. 
C)  It is the difference between the actual and standard unit price of an input multiplied by the number of inputs purchased. 
D)  It is the difference between the actual and standard unit price of an output multiplied by the number of inputs purchased.

Question 5

During August, 40,000 units were produced. The standard quantity of material allowed per unit was 5 kg at a standard cost of $2.50 per kilogram. Suppose the company had a favourable usage variance of $25,000. What would have been the actual quantity of materials used?

Accepted Answer

A)  95,000 kg 
B)  105,000 kg 
C)  190,000 kg 
D)  210,000 kg 
A)  95,000 kg 
B)  105,000 kg 
C)  190,000 kg 
D)  210,000 kg

Question 6

Managers develop quantity standards when they decide what amount of input should be used per unit of output.

Accepted Answer

A) True 
 B)False

Question 7

Black and Digger's manufactures hedgers. During the year, it manufactured 5,000 hedgers, using 4.2 hours of direct labour per hedger at a rate of $8 per hour. The materials and labour standards for manufacturing the hedgers are as follows:
Direct materials (10 units @ $2 per unit) $20
Direct labour (4 hours @ $7.50 per hour) 30
Black and Digger's actually used 53,000 units of direct materials at a price of $2.25 per unit.
Required:
A. Determine the materials price variance and whether it is favourable or unfavourable.
B. Determine the materials usage variance and whether it is favourable or unfavourable.
C. Determine the labour rate variance and whether it is favourable or unfavourable.
D. Determine the labour efficiency variance and whether it is favourable or unfavourable.

Accepted Answer

A. MPV= (AP - SP) x AQ
= ($2.25 - $2.00)

Question 8

Serenity Equestrian Corporation
Serenity Equestrian Corporation produces high-quality leather saddles. The company has a standard cost system and has set the following standards for materials and labour: $$\begin{array} { l l } 
\text { Leather } ( 20 \text { strips } ( Q , \$ 15 \text { per strip) } & \$ 300 \
\text { Direct labour } ( 15 \text { hours } ( a ) \$ 15 \text { per hour } ) & \$ 225 \
\text { Total prime cost } & \$ 525
\end{array}$$ During the year, the company produced 150 saddles. Actual leather purchased was 3,100 strips at $12 per strip. There were no beginning or ending inventories of leather.Actual direct labour was 2,500 hours at $16 per hour.
-Refer to Serenity Equestrian Corporation. What is the standard cost of leather for the production of 150 saddles?

Accepted Answer

A)  $36,000 
B)  $37,200 
C)  $45,000 
D)  $46,500 
A)  $36,000 
B)  $37,200 
C)  $45,000 
D)  $46,500

Question 9

To determine whether variances are significant, managers set control limits, which represent the acceptable range, plus or minus an allowable deviation.

Accepted Answer

A) True 
 B)False

Question 10

Allan Company
Allan Company manufactures overalls. During the year, it manufactured 125,000 overalls, using 2.9 hours of direct labour per unit at a rate of $6.25 per hour. The materials and labour standards for manufacturing the overalls are as follows: $\begin{array}{lll}
\text {Direct materials ( $ 5 \mathrm{~m} $ of denim $ @ \$ 2 $ per metre) }&\$10\
\text {Direct labour (3 hours $ @ \$ 6 $ per  }&18\
\end{array}$
 The company required 600,000 m at $1.95 per metre to make the 125,000 overalls.There were no beginning or ending inventories.
-Refer to Allan Company. What is the labour efficiency variance?

Accepted Answer

A)  $75,000 U 
B)  $75,000 F 
C)  $78,125 U 
D)  $78,125 F 
A)  $75,000 U 
B)  $75,000 F 
C)  $78,125 U 
D)  $78,125 F

Question 11

Refer to Roofus Company. What is the journal entry to record the issuance and usage of materials?

Accepted Answer

A)  Work in Process 18,900
Materials Usage Variance 675
Materials 19,575 
B)  Work in Process 19,575
Materials Usage Variance 675
Materials 18,900 
C)  Work in Process 24,500
Materials Usage Variance 875
Materials 25,375 
D)  Work in Process 25,375
Materials Usage Variance 875
Materials 24,500 
A)  Work in Process 18,900
Materials Usage Variance 675
Materials 19,575 
B)  Work in Process 19,575
Materials Usage Variance 675
Materials 18,900 
C)  Work in Process 24,500
Materials Usage Variance 875
Materials 25,375 
D)  Work in Process 25,375
Materials Usage Variance 875
Materials 24,500

Question 12

Suppose the actual labour rate exceeds the standard labour rate, and the actual labour hours exceed the number of hours allowed. What would be the labour rate variance and labour efficiency variance? Labour Rate Labour Efficiency
Variance Variance

Accepted Answer

A)  favourable favourable 
B)  favourable unfavourable 
C)  unfavourable favourable 
D)  unfavourable unfavourable 
A)  favourable favourable 
B)  favourable unfavourable 
C)  unfavourable favourable 
D)  unfavourable unfavourable

Question 13

Which of the following best reflects target cost?

Accepted Answer

A)  Desired unit cost - expected unit cost 
B)  Expected unit cost - desired profit per unit 
C)  Desired profit per unit - expected unit cost 
D)  Expected sales price per unit - desired profit per unit 
A)  Desired unit cost - expected unit cost 
B)  Expected unit cost - desired profit per unit 
C)  Desired profit per unit - expected unit cost 
D)  Expected sales price per unit - desired profit per unit

Question 14

Managers develop price standards when they determine what amount should be paid for the quantity of input to be used.

Accepted Answer

A) True 
 B)False

Question 15

Western Plastics Company has the following information concerning its direct materials: $\begin{array}{lr}\text { Direct Materials: }\
\text { Standard quantity } & 100,000 \
\text { Actual quantity } & 80,000 \
\text { Standard price } & \$ 3 \
\text { Actual price } & \$ 4
\end{array}$ Required:
A. Determine the materials price variance and whether it is favourable or unfavourable.
B. Determine the materials usage variance and whether it is favourable or unfavourable.
C. Western Plastics has set control limits stating that actual costs should be investigated if they fall outside the acceptable range of the standard materials cost ±10%.
i. What is the standard materials cost?
ii. What are the upper and lower control limits?
iii. What is the actual materials cost?
iv. Should the actual materials cost be investigated?

Accepted Answer

A. @#IMG-DLM& B. @#IMG-DLM& C. i. The standard materials cos

Question 16

One reason for adopting a standard cost system is to make product costing easier.

Accepted Answer

A) True 
 B)False

Question 17

Allan Company
Allan Company manufactures overalls. During the year, it manufactured 125,000 overalls, using 2.9 hours of direct labour per unit at a rate of $6.25 per hour. The materials and labour standards for manufacturing the overalls are as follows: $\begin{array}{lll}
\text {Direct materials ( $ 5 \mathrm{~m} $ of denim $ @ \$ 2 $ per metre) }&\$10\
\text {Direct labour (3 hours $ @ \$ 6 $ per  }&18\
\end{array}$
 The company required 600,000 m at $1.95 per metre to make the 125,000 overalls.There were no beginning or ending inventories.
-Refer to Allan Company. What is the entry to record the issuance and usage of materials?

Accepted Answer

A)  Work in Process 1,170,000
Materials Usage Variance 48,750
Materials 1,218,750 
B)  Work in Process 1,200,000
Materials Usage Variance 50,000
Materials 1,250,000 
C)  Work in Process 1,218,750
Materials Usage Variance 48,750
Materials 1,170,000 
D)  Work in Process 1,250,000
Materials Usage Variance 50,000
Materials 1,200,000 
A)  Work in Process 1,170,000
Materials Usage Variance 48,750
Materials 1,218,750 
B)  Work in Process 1,200,000
Materials Usage Variance 50,000
Materials 1,250,000 
C)  Work in Process 1,218,750
Materials Usage Variance 48,750
Materials 1,170,000 
D)  Work in Process 1,250,000
Materials Usage Variance 50,000
Materials 1,200,000

Question 18

Match each of the following calculations with their corresponding variance.
-Labour efficiency variance

Accepted Answer

A) Actual quantity × actual price 
B) (Actual hours × actual rate) - (standard hours × standard rate) 
C) (Actual quantity × actual price) - (standard quantity × standard price) 
D) (Actual hours - standard hours) × standard rate 
E) (Actual price - standard price) × actual quantity
F)Standard quantity × standard price
G)(Actual rate - standard rate) × actual hours
H)(Actual quantity - standard quantity) × standard price 
A) Actual quantity × actual price 
B) (Actual hours × actual rate) - (standard hours × standard rate) 
C) (Actual quantity × actual price) - (standard quantity × standard price) 
D) (Actual hours - standard hours) × standard rate 
E) (Actual price - standard price) × actual quantity
F)Standard quantity × standard price
G)(Actual rate - standard rate) × actual hours
H)(Actual quantity - standard quantity) × standard price

Question 19

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-These reflect the amount that should be paid for one unit of the input to be used.

Accepted Answer

A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards 
A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards

Question 20

What provides both the production data needed to calculate the standard unit cost and the underlying details for the standard cost per unit?

Accepted Answer

A)  the balance sheet 
B)  the standard cost sheet 
C)  the standard production budget 
D)  the standard work-in-process account 
A)  the balance sheet 
B)  the standard cost sheet 
C)  the standard production budget 
D)  the standard work-in-process account

The total budget variance is the difference between the actual cost of the input and its actual cost.

Which statement is characteristic of currently attainable standards?

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Actual usage of inputs is greater than the standard usage.

Which statement best describes the material price variance?

During August, 40,000 units were produced. The standard quantity of material allowed per unit was 5 kg at a standard cost of $2.50 per kilogram. Suppose the company had a favourable usage variance of $25,000. What would have been the actual quantity of materials used?

Managers develop quantity standards when they decide what amount of input should be used per unit of output.

To determine whether variances are significant, managers set control limits, which represent the acceptable range, plus or minus an allowable deviation.

Refer to Roofus Company. What is the journal entry to record the issuance and usage of materials?

Suppose the actual labour rate exceeds the standard labour rate, and the actual labour hours exceed the number of hours allowed. What would be the labour rate variance and labour efficiency variance? Labour Rate Labour Efficiency Variance Variance

Which of the following best reflects target cost?

Managers develop price standards when they determine what amount should be paid for the quantity of input to be used.

One reason for adopting a standard cost system is to make product costing easier.

Match each of the following calculations with their corresponding variance. -Labour efficiency variance

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -These reflect the amount that should be paid for one unit of the input to be used.

What provides both the production data needed to calculate the standard unit cost and the underlying details for the standard cost per unit?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 10: Standard Costing: a Managerial Control Tool

The total budget variance is the difference between the actual cost of the input and its actual cost.

Which statement is characteristic of currently attainable standards?

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Actual usage of inputs is greater than the standard usage.

Which statement best describes the material price variance?

During August, 40,000 units were produced. The standard quantity of material allowed per unit was 5 kg at a standard cost of $2.50 per kilogram. Suppose the company had a favourable usage variance of $25,000. What would have been the actual quantity of materials used?

Managers develop quantity standards when they decide what amount of input should be used per unit of output.

To determine whether variances are significant, managers set control limits, which represent the acceptable range, plus or minus an allowable deviation.

Refer to Roofus Company. What is the journal entry to record the issuance and usage of materials?

Suppose the actual labour rate exceeds the standard labour rate, and the actual labour hours exceed the number of hours allowed. What would be the labour rate variance and labour efficiency variance? Labour Rate Labour Efficiency Variance Variance

Which of the following best reflects target cost?

Managers develop price standards when they determine what amount should be paid for the quantity of input to be used.

One reason for adopting a standard cost system is to make product costing easier.

Match each of the following calculations with their corresponding variance. -Labour efficiency variance

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -These reflect the amount that should be paid for one unit of the input to be used.

What provides both the production data needed to calculate the standard unit cost and the underlying details for the standard cost per unit?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters