Question 1

When standard costs are used in a cost accounting system, the transfer of units from the Finished Goods Inventory to the Cost of Goods Sold account involves:

Accepted Answer

A)  A debit to the Cost of Goods Sold account for the actual cost of units transferred. 
B)  A credit to the Finished Goods Inventory account for the standard cost of units transferred. 
C)  Recording a cost variance for the difference between the actual and standard cost of units transferred. 
D)  The elimination of any cost variances relating to units sold. 
A)  A debit to the Cost of Goods Sold account for the actual cost of units transferred. 
B)  A credit to the Finished Goods Inventory account for the standard cost of units transferred. 
C)  Recording a cost variance for the difference between the actual and standard cost of units transferred. 
D)  The elimination of any cost variances relating to units sold.

Question 2

In the space provided, prepare the journal entry to dispose of any over- or under-applied overhead directly to cost of goods sold.

Accepted Answer

The answer of In the space provided, prepare the journal...

Question 3

Overhead volume variances indicate:

Accepted Answer

A)  Efficient performance. 
B)  Inefficient performance. 
C)  Fluctuations in the level of production from month to month. 
D)  Inadequate budgeting. 
A)  Efficient performance. 
B)  Inefficient performance. 
C)  Fluctuations in the level of production from month to month. 
D)  Inadequate budgeting.

Question 4

A labor efficiency variance relates to the number of hours actually worked, compared to the standard hours.

Accepted Answer

A) True 
 B)False

Question 5

Standard cost system-disposition of variances
The cost of goods sold at standard cost for Field Company for 2009 amounted to $425,000 and was 60% of net sales. As of the end of 2009, the total of balances remaining in cost variance accounts was a net unfavorable cost variance of $8,000, which is not considered material.
(a) What is the amount shown in Field 's 2009 income statement for cost of goods sold? $________________
(b) What is the amount reported in Field 's 2009 income statement for gross profit on sales? $________________

Accepted Answer

The answer of Standard cost system-disposition of variances
The cost of...

Question 6

Roman's labor efficiency variance for July is:

Accepted Answer

A)  $1,250 favorable. 
B)  $1,190 favorable. 
C)  $1,213 unfavorable. 
D)  $37 unfavorable. 
A)  $1,250 favorable. 
B)  $1,190 favorable. 
C)  $1,213 unfavorable. 
D)  $37 unfavorable.

Question 7

Standard cost systems are generally compatible with job cost systems or with process cost systems.

Accepted Answer

A) True 
 B)False

Question 8

The direct labor rate variance for the period was:

Accepted Answer

A)  $425 favorable. 
B)  $360 favorable. 
C)  $360 unfavorable. 
D)  $425 unfavorable. 
A)  $425 favorable. 
B)  $360 favorable. 
C)  $360 unfavorable. 
D)  $425 unfavorable.

Question 9

A total cost variance for materials can be caused by differences in the quantity used, or in the price paid, but not by both.

Accepted Answer

A) True 
 B)False

Question 10

EJB Company used a "normal" production level of 10,000 units to determine the standard per-unit cost of manufacturing overhead. Which of the following is not true?

Accepted Answer

A)  There is no overhead volume variance for a given month if actual production that month is 10,000 units. 
B)  When actual production exceeds 10,000 units, use of standard costs results in a favorable overhead volume variance. 
C)  When actual production is less than 10,000 units, use of standard costs results in an unfavorable total overhead variance. 
D)  Overhead variances arising as a result of producing more or less than 10,000 units do not indicate either strong or poor performance by the Production Department. 
A)  There is no overhead volume variance for a given month if actual production that month is 10,000 units. 
B)  When actual production exceeds 10,000 units, use of standard costs results in a favorable overhead volume variance. 
C)  When actual production is less than 10,000 units, use of standard costs results in an unfavorable total overhead variance. 
D)  Overhead variances arising as a result of producing more or less than 10,000 units do not indicate either strong or poor performance by the Production Department.

Question 11

If actual direct labor cost was $7,560 and standard labor cost was $7,000, the journal entry to record this would include:

Accepted Answer

A)  A credit to the labor rate variance account of $560 and a credit to Direct Labor of $7,000. 
B)  A debit to the labor rate variance account of $560 and a debit to Direct Labor of $7,000. 
C)  A credit to the labor rate variance account of $560 and a debit to Direct Labor of $7,560. 
D)  A debit to the labor rate variance account of $560 and a credit to Direct Labor of $7,560. 
A)  A credit to the labor rate variance account of $560 and a credit to Direct Labor of $7,000. 
B)  A debit to the labor rate variance account of $560 and a debit to Direct Labor of $7,000. 
C)  A credit to the labor rate variance account of $560 and a debit to Direct Labor of $7,560. 
D)  A debit to the labor rate variance account of $560 and a credit to Direct Labor of $7,560.

Question 12

The total overhead variance is the difference between:

Accepted Answer

A)  Budgeted overhead and applied overhead. 
B)  Actual overhead and budgeted overhead. 
C)  Actual overhead and applied overhead. 
D)  Applied overhead and budgeted overhead. 
A)  Budgeted overhead and applied overhead. 
B)  Actual overhead and budgeted overhead. 
C)  Actual overhead and applied overhead. 
D)  Applied overhead and budgeted overhead.

Question 13

The Victor Corporation has been incurring favorable overhead volume variances in each of the last several months. These persistent favorable variances indicate:

Accepted Answer

A)  Victor's management is unusually efficient. 
B)  The overhead application rate should be revised upward. 
C)  Monthly output is consistently under budget. 
D)  Monthly output is consistently over that budgeted. 
A)  Victor's management is unusually efficient. 
B)  The overhead application rate should be revised upward. 
C)  Monthly output is consistently under budget. 
D)  Monthly output is consistently over that budgeted.

Question 14

What is the standard total manufacturing overhead?

Accepted Answer

A)  $112.50. 
B)  $18,700. 
C)  $287. 
D)  $18,812.50. 
A)  $112.50. 
B)  $18,700. 
C)  $287. 
D)  $18,812.50.

Question 15

Standard cost system-materials and labor variances
The Hemlock Corporation produces a single product. The company has developed the following standards for labor and materials:
During the past month, the company purchased 3,500 pounds of direct materials at a total cost of $4,550. All of this material was used in the production of 1,300 units of output. Direct labor cost totaled $40,300 for the month. The following variances have been computed:
Compute the following. If the result is a variance indicate whether it is favorable or unfavorable.
(a) The standard price of materials. _________________.
(b) The standard quantity of materials allowed per unit of output _________.
(c) The actual direct labor cost per hour for the month. _____________.
(d) The labor rate variance. ______________________.
 $\begin{array}{l|l|l|}\hline &\text { Direct } & \text { Direct } \
\hline &\text { Materials } & \text { Labor } \
\hline \text { Standard quantity or hours per unit } & \text { ? pounds per unit } & 2.0 \text { hours per unit } \
\hline \text { Standard price or rate } & \text { ? per pound } & \$ 15 \text { per hour } \
\hline \text { Standard cost per unit } & ? & \$ 30.00\\hline
\end{array}$ $$\begin{array} { | l | l | } 
\hline \text { Materials quantity variance } & \$ 670 \text { unfavorable } \
\hline \text { Total materials variance } & \$ 325 \text { favorable } \
\hline \text { Labor efficiency variance } & \$ 3,475 \text { favorable } \
\hline
\end{array}$$

Accepted Answer

(a) $1.58 (b) 3.93 p

Question 16

Which of the following is not a possible cause of an unfavorable direct labor efficiency variance?

Accepted Answer

A)  Lack of motivation. 
B)  Low quality materials. 
C)  Poor supervision. 
D)  All of the above could be considered possible causes of an unfavorable labor efficiency variance. 
A)  Lack of motivation. 
B)  Low quality materials. 
C)  Poor supervision. 
D)  All of the above could be considered possible causes of an unfavorable labor efficiency variance.

Question 17

The company's CEO is the only person who analyzes costs variances.

Accepted Answer

A) True 
 B)False

Question 18

A variance is said to be unfavorable when actual costs exceed standard costs.

Accepted Answer

A) True 
 B)False

Question 19

Establishing standard cost amounts
Explain why the determination of standard cost amounts should not be the sole responsibility of a company's cost accountant.

Accepted Answer

Standard cost systems are influenced by

Question 20

A difference between a standard cost and an actual cost would be recorded in the Work-in-Process account.

Accepted Answer

A) True 
 B)False

Exam 24: Standard Cost Systems

When standard costs are used in a cost accounting system, the transfer of units from the Finished Goods Inventory to the Cost of Goods Sold account involves:

In the space provided, prepare the journal entry to dispose of any over- or under-applied overhead directly to cost of goods sold.

Overhead volume variances indicate:

A labor efficiency variance relates to the number of hours actually worked, compared to the standard hours.

Roman's labor efficiency variance for July is:

Standard cost systems are generally compatible with job cost systems or with process cost systems.

The direct labor rate variance for the period was:

A total cost variance for materials can be caused by differences in the quantity used, or in the price paid, but not by both.

EJB Company used a "normal" production level of 10,000 units to determine the standard per-unit cost of manufacturing overhead. Which of the following is not true?

If actual direct labor cost was $7,560 and standard labor cost was $7,000, the journal entry to record this would include:

The total overhead variance is the difference between:

The Victor Corporation has been incurring favorable overhead volume variances in each of the last several months. These persistent favorable variances indicate:

What is the standard total manufacturing overhead?

Which of the following is not a possible cause of an unfavorable direct labor efficiency variance?

The company's CEO is the only person who analyzes costs variances.

A variance is said to be unfavorable when actual costs exceed standard costs.

Establishing standard cost amounts Explain why the determination of standard cost amounts should not be the sole responsibility of a company's cost accountant.

A difference between a standard cost and an actual cost would be recorded in the Work-in-Process account.

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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