Question 1

It is possible for the overhead volume variance to be favorable and the overhead spending variance to be unfavorable.

Accepted Answer

A) True 
 B)False

Question 2

Standard costs are typically reviewed once per year.

Accepted Answer

A) True 
 B)False

Question 3

A good standard cost system should always generate unfavorable variances.

Accepted Answer

A) True 
 B)False

Question 4

A standard cost is predetermined,that is,determined before actual costs of the current period have been computed.

Accepted Answer

A) True 
 B)False

Question 5

If the hourly wage rate actually paid during January is higher than the standard rate,the result is:

Accepted Answer

A) An unfavorable labor rate variance. 
B) A favorable labor rate variance. 
C) An unfavorable labor efficiency variance. 
D) A favorable total labor variance. 
A) An unfavorable labor rate variance. 
B) A favorable labor rate variance. 
C) An unfavorable labor efficiency variance. 
D) A favorable total labor variance.

Question 6

In most companies using standard cost procedures,the costs charged to Work in Process,Finished Goods,and Cost of Goods Sold are the actual costs,not the standard costs.

Accepted Answer

A) True 
 B)False

Question 7

An unfavorable overhead volume variance results from:

Accepted Answer

A) An unfavorable overhead spending variance. 
B) Poor decisions made by the production manager. 
C) Producing at levels of output that exceed normal output levels. 
D) Producing at levels of output that fall short of normal output levels. 
A) An unfavorable overhead spending variance. 
B) Poor decisions made by the production manager. 
C) Producing at levels of output that exceed normal output levels. 
D) Producing at levels of output that fall short of normal output levels.

Question 8

In a standard cost system,actual costs are charged to work in process as they are incurred.

Accepted Answer

A) True 
 B)False

Question 9

Caesar,Inc.purchased and used 47,600 pounds of goods to produce an actual quantity of 15,300 units.Each unit required 3 pounds of goods.The quantity variance was $10,200 unfavorable and the price variance was $7,140 unfavorable.What was the actual price and the standard price per pound?

Accepted Answer

The actual quantity

Question 10

[The following information applies to the questions displayed below.]
Cooper Corporation produces decorator wall coverings.Budgeted production is 240,000 square feet per month,and the standard direct labor requirement to make this amount is 6,000 hours.All overhead is allocated based on direct labor hours.The following information is available:
  
-The journal entry to apply overhead to Work in Process Inventory for the month included:

Accepted Answer

A) A debit to Work in Process Inventory of $16,000. 
B) A debit to Work in Process Inventory of $13,500. 
C) A debit to Work in Process Inventory of $16,875. 
D) A credit to Work in Process Inventory of $875. 
A) A debit to Work in Process Inventory of $16,000. 
B) A debit to Work in Process Inventory of $13,500. 
C) A debit to Work in Process Inventory of $16,875. 
D) A credit to Work in Process Inventory of $875.

Question 11

External auditors are often called upon to evaluate cost variances.

Accepted Answer

A) True 
 B)False

Question 12

[The following information applies to the questions displayed below.]
Cooper Corporation produces decorator wall coverings.Budgeted production is 240,000 square feet per month,and the standard direct labor requirement to make this amount is 6,000 hours.All overhead is allocated based on direct labor hours.The following information is available:
  
-The overhead spending variance for the month in question was:

Accepted Answer

A) $250 unfavorable. 
B) $2,500 unfavorable. 
C) $875 favorable. 
D) $3,375 unfavorable. 
A) $250 unfavorable. 
B) $2,500 unfavorable. 
C) $875 favorable. 
D) $3,375 unfavorable.

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

[The following information applies to the questions displayed below.]
Eagle Company uses a standard cost system that has provided the following data:
  
-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 15

Controlling the materials quantity variance is usually the responsibility of:

Accepted Answer

A) The cost accountant. 
B) The purchasing agent. 
C) The marketing director. 
D) The production supervisor. 
A) The cost accountant. 
B) The purchasing agent. 
C) The marketing director. 
D) The production supervisor.

Question 16

There is an unfavorable labor efficiency variance when:

Accepted Answer

A) Actual hours are greater than standard hours. 
B) Actual hours are less than standard hours. 
C) The standard rate per hour is greater than the actual rate per hour. 
D) The standard rate per hour is less than the actual rate per hour. 
A) Actual hours are greater than standard hours. 
B) Actual hours are less than standard hours. 
C) The standard rate per hour is greater than the actual rate per hour. 
D) The standard rate per hour is less than the actual rate per hour.

Question 17

If the standard quantity of materials is 84,500 units at $0.15 per unit and the actual quantity is 95,000 units at $0.12 per unit,then the materials quantity variance is:

Accepted Answer

A) $2,850 Favorable. 
B) $1,575 Unfavorable. 
C) $1,275 Favorable. 
D) $2,850 Unfavorable. 
A) $2,850 Favorable. 
B) $1,575 Unfavorable. 
C) $1,275 Favorable. 
D) $2,850 Unfavorable.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Standard cost system-materials and labor variances
Job no.811 involved the production of 200 units of product MF.The total standard and actual costs for materials and direct labor on this job are shown below:
   Compute the following cost variances for job no.811.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: $________

Accepted Answer

The answer of Standard cost system-materials and labor variances
Job no.811...

Question 20

Unfavorable standard cost variances are normally closed at the end of the period by:

Accepted Answer

A) Debiting the variance account and crediting Cost of Goods Sold. 
B) Crediting the variance account and debiting Cost of Goods Sold. 
C) Debiting the variance account and crediting Work in Process. 
D) Crediting the variance account and debiting Work in Process. 
A) Debiting the variance account and crediting Cost of Goods Sold. 
B) Crediting the variance account and debiting Cost of Goods Sold. 
C) Debiting the variance account and crediting Work in Process. 
D) Crediting the variance account and debiting Work in Process.

Exam 24: Standard Cost Systems

It is possible for the overhead volume variance to be favorable and the overhead spending variance to be unfavorable.

Standard costs are typically reviewed once per year.

A good standard cost system should always generate unfavorable variances.

A standard cost is predetermined,that is,determined before actual costs of the current period have been computed.

If the hourly wage rate actually paid during January is higher than the standard rate,the result is:

In most companies using standard cost procedures,the costs charged to Work in Process,Finished Goods,and Cost of Goods Sold are the actual costs,not the standard costs.

An unfavorable overhead volume variance results from:

In a standard cost system,actual costs are charged to work in process as they are incurred.

Caesar,Inc.purchased and used 47,600 pounds of goods to produce an actual quantity of 15,300 units.Each unit required 3 pounds of goods.The quantity variance was $10,200 unfavorable and the price variance was $7,140 unfavorable.What was the actual price and the standard price per pound?

External auditors are often called upon to evaluate cost variances.

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

[The following information applies to the questions displayed below.] Eagle Company uses a standard cost system that has provided the following data: -The direct labor rate variance for the period was:

Controlling the materials quantity variance is usually the responsibility of:

There is an unfavorable labor efficiency variance when:

If the standard quantity of materials is 84,500 units at $0.15 per unit and the actual quantity is 95,000 units at $0.12 per unit,then the materials quantity variance is:

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

Unfavorable standard cost variances are normally closed at the end of the period by:

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