Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

[The following information applies to the questions displayed below.]
Maple Company's flexible budget,based upon the number of equivalent units produced,called for the use of 5,000 square yards of fabric at a standard cost of $2.45 per square yard.The Production Department actually used 5,200 square yards costing $2.35 per square yard during June.
-The materials price variance for Maple Company for June is:

Accepted Answer

A) $520 favorable. 
B) $990 favorable. 
C) $30 unfavorable. 
D) $520 unfavorable. 
A) $520 favorable. 
B) $990 favorable. 
C) $30 unfavorable. 
D) $520 unfavorable. A

Question 3

Factory overhead variances are usually recorded when:

Accepted Answer

A) Overhead is applied to Work in Process. 
B) Goods are finished and transferred to finished goods inventory. 
C) Goods are sold. 
D) Actual factory overhead costs are incurred. 
A) Overhead is applied to Work in Process. 
B) Goods are finished and transferred to finished goods inventory. 
C) Goods are sold. 
D) Actual factory overhead costs are incurred. A

Question 4

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 5

A spending variance results from incurring more overhead costs than allowed for the actual level of activity achieved.

Accepted Answer

A) True 
 B)False

Question 6

In setting standards,management's level of performance expectation must be something less than ideal.

Accepted Answer

A) True 
 B)False

Question 7

The calculation of the labor efficiency variance is:

Accepted Answer

A) Standard Hourly Rate × (Standard Hours − Actual Hours). 
B) Standard Hours × (Standard Rate − Actual Rate). 
C) Actual Hours × (Standard Rate − Actual Rate). 
D) Actual Rate × (Standard Hours − Actual Hours). 
A) Standard Hourly Rate × (Standard Hours − Actual Hours). 
B) Standard Hours × (Standard Rate − Actual Rate). 
C) Actual Hours × (Standard Rate − Actual Rate). 
D) Actual Rate × (Standard Hours − Actual Hours).

Question 8

Standard costs:

Accepted Answer

A) May be used in job order cost systems but not in process cost accounting systems. 
B) Should be revised upward when actual costs are higher than expected because of waste and inefficiency. 
C) Are the same for all companies in a given industry. 
D) Are the costs that should be incurred to produce a product under normal conditions. 
A) May be used in job order cost systems but not in process cost accounting systems. 
B) Should be revised upward when actual costs are higher than expected because of waste and inefficiency. 
C) Are the same for all companies in a given industry. 
D) Are the costs that should be incurred to produce a product under normal conditions.

Question 9

The materials price variance is calculated by multiplying the difference between actual unit price and standard unit price by the standard units purchased.

Accepted Answer

A) True 
 B)False

Question 10

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

Question 11

Standard costs
Define standard costs.Under what conditions should previously established standard costs be revised?

Accepted Answer

Standard costs are predetermined estimat

Question 12

[The following information applies to the questions displayed below.]
The Starbright Corporation has compiled the following data.The company intends to use this information to develop standard costs per unit for its single product:
Direct materials = $50 per ton
Direct labor = $12.75 per hour
Variable manufacturing overhead = $5 per direct labor hour
Fixed manufacturing overhead = $18,700
Expected production = 1,700 units
Each unit of the company's single product requires 2.5 tons of direct materials and 22.5 hours to manufacture.
-What is the standard cost for direct materials per unit for Starbright's single product?

Accepted Answer

A) $50 per unit 
B) $100 per unit 
C) $150 per unit 
D) $125 per unit 
A) $50 per unit 
B) $100 per unit 
C) $150 per unit 
D) $125 per unit

Question 13

The level of production plays an important role in determining cost standards.

Accepted Answer

A) True 
 B)False

Question 14

In a standard cost system,finished goods are reported in:

Accepted Answer

A) The balance sheet at standard cost. 
B) The balance sheet at actual cost. 
C) The income statement at standard cost. 
D) The income statement at actual cost. 
A) The balance sheet at standard cost. 
B) The balance sheet at actual cost. 
C) The income statement at standard cost. 
D) The income statement at actual cost.

Question 15

With respect to materials costs,the supervisor of the Production Department should be held responsible for:

Accepted Answer

A) A favorable cost variance of $520. 
B) A favorable cost variance of $990. 
C) An unfavorable cost variance of $550. 
D) An unfavorable cost variance of $490. 
A) A favorable cost variance of $520. 
B) A favorable cost variance of $990. 
C) An unfavorable cost variance of $550. 
D) An unfavorable cost variance of $490.

Question 16

The use of excessive quantities of material in manufacturing a product causes an unfavorable materials quantity variance.

Accepted Answer

A) True 
 B)False

Question 17

Accounting terminology
Listed below are seven technical accounting terms introduced or emphasized in this chapter:   Each of the following statements may (or may not)describe one of these technical terms.In the space provided beside each statement,indicate the accounting term described,or answer "None" if the statement does not correctly describe any of the terms.
________ (a)A materials variance,which is the responsibility of the Purchasing Department.
________ (b)The variance that exists whenever actual production levels differ from normal levels.
________ (c)Unit costs expected to be incurred under normal conditions.
________ (d)A labor variance caused by a difference between standard and actual hours required to complete a task.
____(e)The variance caused by incurring more overhead costs than allowed for at a given level of production.

Accepted Answer

(a)Materials price variance (b

Question 18

Standard cost systems variance computations
Livingston Corporation recently implemented a standard cost system.The company's cost accountant has provided the following data to perform a variance analysis for May:
   Compute the following variances.Indicate whether each variance is favorable (F)or unfavorable (U):
(a)Materials price variance: $________
(b)Materials quantity variance: $________
(c)Labor rate variance: $________
(d)Labor efficiency variance: $________
(e)Overhead spending variance: $________
(f)Overhead volume variance: $________

Accepted Answer

(a)$39,000 F (b)$31,

Question 19

There will be a favorable materials price variance if:

Accepted Answer

A) The standard price per unit is less than the actual price per unit. 
B) The standard price per unit is greater than the actual price per unit. 
C) The actual quantity purchased is greater than expected. 
D) The actual quantity purchased is less than expected. 
A) The standard price per unit is less than the actual price per unit. 
B) The standard price per unit is greater than the actual price per unit. 
C) The actual quantity purchased is greater than expected. 
D) The actual quantity purchased is less than expected.

Question 20

A large unanticipated reduction in the property taxes on a company's factory would,all other things equal,most likely cause:

Accepted Answer

A) A favorable overhead spending variance. 
B) An unfavorable overhead spending variance. 
C) A favorable overhead volume variance. 
D) An unfavorable overhead volume variance. 
A) A favorable overhead spending variance. 
B) An unfavorable overhead spending variance. 
C) A favorable overhead volume variance. 
D) An unfavorable overhead volume variance.

Exam 24: Standard Cost Systems

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

Factory overhead variances are usually recorded when:

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 spending variance results from incurring more overhead costs than allowed for the actual level of activity achieved.

In setting standards,management's level of performance expectation must be something less than ideal.

The calculation of the labor efficiency variance is:

Standard costs:

The materials price variance is calculated by multiplying the difference between actual unit price and standard unit price by the standard units purchased.

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

Standard costs Define standard costs.Under what conditions should previously established standard costs be revised?

The level of production plays an important role in determining cost standards.

In a standard cost system,finished goods are reported in:

With respect to materials costs,the supervisor of the Production Department should be held responsible for:

The use of excessive quantities of material in manufacturing a product causes an unfavorable materials quantity variance.

There will be a favorable materials price variance if:

A large unanticipated reduction in the property taxes on a company's factory would,all other things equal,most likely cause:

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

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

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

Filters