Question 1

Nonfinancial performance output measures are used to improve the input measures.

Accepted Answer

A) True 
 B)False

Question 2

A company records their inventory purchases at standard cost but also records purchase price variances. The company purchased 5,000 widgets $8.00. The standard cost for the widgets is $7.60. Which of the following would be included in the journal entry?

Accepted Answer

A)  $38,000 Debit to Accounts Payable 
B)  $ 2,000 Credit to Direct Materials Price Variance 
C)  $ 2,000 Debit to Accounts Payable 
D)  $ 2,000 Debit to Direct Materials Price Variance 
A)  $38,000 Debit to Accounts Payable 
B)  $ 2,000 Credit to Direct Materials Price Variance 
C)  $ 2,000 Debit to Accounts Payable 
D)  $ 2,000 Debit to Direct Materials Price Variance

Question 3

The Flapjack Corporation had 8,200 actual direct labor hours at an actual rate of $12.40 per hour. Original production had been budgeted for 1,100 units, but only 1,000 units were actually produced. Labor standards were 7.6 hours per completed unit at a standard rate of $13.00 per hour. Compute the labor time variance.

Accepted Answer

A)  9,880F 
B)  9,880U 
C)  7,800U 
D)  7,800F 
A)  9,880F 
B)  9,880U 
C)  7,800U 
D)  7,800F

Question 4

Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from standard costs.

Accepted Answer

A) True 
 B)False

Question 5

The difference between the standard cost of a product and its actual cost is called a variance.

Accepted Answer

A) True 
 B)False

Question 6

The following data relate to direct materials costs for November:   What is the direct materials price variance?

Accepted Answer

A)  $3,600 favorable 
B)  $160 favorable 
C)  $3,760 favorable 
D)  $3,600 unfavorable 
A)  $3,600 favorable 
B)  $160 favorable 
C)  $3,760 favorable 
D)  $3,600 unfavorable

Question 7

Calculate the Total Direct Labor Variance using the above information

Accepted Answer

A)  $2,051.25 Favorable 
B)  $2,051.25 Unfavorable 
C)  $2,362.50 Unfavorable 
D)  $2,362.50 Favorable 
A)  $2,051.25 Favorable 
B)  $2,051.25 Unfavorable 
C)  $2,362.50 Unfavorable 
D)  $2,362.50 Favorable

Question 8

An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.

Accepted Answer

A) True 
 B)False

Question 9

Standards are designed to evaluate price and quantity variances separately.

Accepted Answer

A) True 
 B)False

Question 10

A negative fixed overhead volume variance can be caused due to the following except:

Accepted Answer

A)  Sales orders at a low level 
B)  Machine breakdowns 
C)  Employee inexperience 
D)  Increase in utility costs 
A)  Sales orders at a low level 
B)  Machine breakdowns 
C)  Employee inexperience 
D)  Increase in utility costs

Question 11

The following data is given for the Bahia Company:   Overhead is applied on standard labor hours.
The factory overhead controllable variance is:

Accepted Answer

A)  $65U 
B)  $65F 
C)  $540U 
D)  $540F 
A)  $65U 
B)  $65F 
C)  $540U 
D)  $540F

Question 12

At the end of the fiscal year, variances from standard costs are usually transferred to the:

Accepted Answer

A)  direct labor account 
B)  factory overhead account 
C)  cost of goods sold account 
D)  direct materials account 
A)  direct labor account 
B)  factory overhead account 
C)  cost of goods sold account 
D)  direct materials account

Question 13

Normally standard costs should be revised when labor rates change to incorporate new union contracts.

Accepted Answer

A) True 
 B)False

Question 14

Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.

Accepted Answer

A) True 
 B)False

Question 15

Robin Company purchased and used 520 pounds of direct materials to produce a product with a 510 pound standard direct materials requirement. The standard materials price is $2.10 per pound. The actual materials price was $2.00 per pound. Prepare the journal entries to record (1) the purchase of the materials and (2) the material entering production. Robin records standards and variances in the general ledger.

Accepted Answer

The answer of Robin Company purchased and used 520 pounds...

Question 16

Cost systems using detailed estimates of each element of manufacturing cost entering into the finished product are called budgeted cost systems.

Accepted Answer

A) True 
 B)False

Question 17

Ruby Company produces a chair that requires 5 yds. of material per unit. The standard price of one yard of material is $7.60. During the month, 8,500 chairs were manufactured, using 40,000 yards at a cost of $7.50. Determine the (a) price variance, (b) quantity variance, and (c) cost variance.

Accepted Answer

(a) Price variance = ($7.60 -

Question 18

The following data is given for the Taylor Company:
   Overhead is applied on standard labor hours.
Compute the direct labor rate and time variances for Taylor Company.

Accepted Answer

Direct labor rate: $62,928 - (

Question 19

The following data is given for the Stringer Company:   Overhead is applied on standard labor hours.
The direct material price variance is:

Accepted Answer

A)  22,800U 
B)  22,800F 
C)  52,000U 
D)  52,000F 
A)  22,800U 
B)  22,800F 
C)  52,000U 
D)  52,000F

Question 20

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:   The amount of the factory overhead controllable variance is:

Accepted Answer

A)  $2,000 unfavorable 
B)  $3,000 favorable 
C)  $0 
D)  $3,000 unfavorable 
A)  $2,000 unfavorable 
B)  $3,000 favorable 
C)  $0 
D)  $3,000 unfavorable

Exam 22: Performance Evaluation Using Variances From Standard Costs

Nonfinancial performance output measures are used to improve the input measures.

A company records their inventory purchases at standard cost but also records purchase price variances. The company purchased 5,000 widgets $8.00. The standard cost for the widgets is $7.60. Which of the following would be included in the journal entry?

Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from standard costs.

The difference between the standard cost of a product and its actual cost is called a variance.

The following data relate to direct materials costs for November: What is the direct materials price variance?

Calculate the Total Direct Labor Variance using the above information

An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.

Standards are designed to evaluate price and quantity variances separately.

A negative fixed overhead volume variance can be caused due to the following except:

The following data is given for the Bahia Company: Overhead is applied on standard labor hours. The factory overhead controllable variance is:

At the end of the fiscal year, variances from standard costs are usually transferred to the:

Normally standard costs should be revised when labor rates change to incorporate new union contracts.

Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.

Cost systems using detailed estimates of each element of manufacturing cost entering into the finished product are called budgeted cost systems.

Ruby Company produces a chair that requires 5 yds. of material per unit. The standard price of one yard of material is $7.60. During the month, 8,500 chairs were manufactured, using 40,000 yards at a cost of $7.50. Determine the (a) price variance, (b) quantity variance, and (c) cost variance.

The following data is given for the Taylor Company: Overhead is applied on standard labor hours. Compute the direct labor rate and time variances for Taylor Company.

The following data is given for the Stringer Company: Overhead is applied on standard labor hours. The direct material price variance is:

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: The amount of the factory overhead controllable variance is:

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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