Question 1

The calculation of the labor rate variance is:

Accepted Answer

A) Standard 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 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 2

[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 labor per unit for Starbright's single product? (Round your answer to the nearest dollar. )

Accepted Answer

A) $100 per unit 
B) $287 per unit 
C) $180 per unit 
D) $285 per unit 
A) $100 per unit 
B) $287 per unit 
C) $180 per unit 
D) $285 per unit

Question 3

Which statement is true regarding a standard cost system?

Accepted Answer

A) Both actual and standard costs are used. 
B) Only standard costs are used. 
C) If variances occur,then something negative in the operations has occurred. 
D) Standards are used only when actual amounts are not available. 
A) Both actual and standard costs are used. 
B) Only standard costs are used. 
C) If variances occur,then something negative in the operations has occurred. 
D) Standards are used only when actual amounts are not available.

Question 4

If the actual cost per pound of direct material is less than the standard cost per pound,there is:

Accepted Answer

A) A favorable materials price variance. 
B) An unfavorable materials price variance. 
C) A favorable materials quantity variance. 
D) A favorable total materials variance. 
A) A favorable materials price variance. 
B) An unfavorable materials price variance. 
C) A favorable materials quantity variance. 
D) A favorable total materials variance.

Question 5

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 journal entry to record the cost of materials used includes:

Accepted Answer

A) A debit to Work in Process Inventory of $11,400. 
B) A debit to Work in Process Inventory of $12,675. 
C) A debit to Materials Price variance of $2,850. 
D) A credit to Materials Price variance of $1,575. 
A) A debit to Work in Process Inventory of $11,400. 
B) A debit to Work in Process Inventory of $12,675. 
C) A debit to Materials Price variance of $2,850. 
D) A credit to Materials Price variance of $1,575.

Question 6

Excessive overtime hours worked by direct labor workers often results in:

Accepted Answer

A) An unfavorable labor rate variance. 
B) A favorable labor rate variance. 
C) A favorable materials price variance. 
D) An unfavorable materials price variance. 
A) An unfavorable labor rate variance. 
B) A favorable labor rate variance. 
C) A favorable materials price variance. 
D) An unfavorable materials price variance.

Question 7

Standard cost system overhead variances
Rogers Manufacturing produces a component part used throughout the computer industry.Variable overhead is allocated to production at a rate of $5 per unit.The company's monthly fixed overhead costs average $30,000.Normal output levels average 40,000 units per month.During April,Rogers produced 50,000 units and incurred actual overhead costs of $280,000.
(a)Total overhead applied to production in April amounted to $________.
(b)Total overhead budgeted in April for the level of output achieved amounted to $________.
(c)April's overhead spending variance was $________ (favorable/unfavorable).
(d)April's overhead volume variance was $________ (favorable/unfavorable).
(e)For which of Rogers' two overhead variances is the production manager held responsible?

Accepted Answer

(a)$287,500 (b)$280,

Question 8

Standard cost system materials variances
Levron Corporation manufactures a line of cosmetics.The standard price of the ingredients in its beauty cream is $7 per ounce;the standard amount of material allowed per jar is 1.25 ounces.During December,5,300 jars were produced,requiring 6,784 ounces of ingredients at a total direct materials cost of $37,312.
(a)Calculate the materials price variance for December.Indicate whether it is favorable (F)or unfavorable (U).$________
(b)Who is responsible for this variance? ________
(c)Calculate the materials quantity variance for December.Indicate whether it is favorable (F)or unfavorable (U).$________
(d)What is Levron Corporation's total materials variance for December? Indicate whether it is favorable (F)or unfavorable (U).$________

Accepted Answer

(a)$10,176 F (b)purc

Question 9

The use of inexpensive,low quality,materials often results in:

Accepted Answer

A) A favorable materials quantity variance. 
B) A favorable labor rate variance. 
C) An unfavorable materials quantity variance. 
D) An unfavorable materials price variance. 
A) A favorable materials quantity variance. 
B) A favorable labor rate variance. 
C) An unfavorable materials quantity variance. 
D) An unfavorable materials price variance.

Question 10

In evaluating cost variances,the accounting department determines whether variances are favorable or unfavorable.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is the most likely explanation for the types of labor variances resulting from Roman's July operations?

Accepted Answer

A) Management used workers who received a higher wage and worked more efficiently. 
B) Management reduced the wage rates in July,which caused the workers to deliberately slow down productivity. 
C) Management used less experienced workers whose lower wage rate more than offset their lower productivity. 
D) Management paid workers more than standard hourly rates,but the excess pay did not result in increased productivity. 
A) Management used workers who received a higher wage and worked more efficiently. 
B) Management reduced the wage rates in July,which caused the workers to deliberately slow down productivity. 
C) Management used less experienced workers whose lower wage rate more than offset their lower productivity. 
D) Management paid workers more than standard hourly rates,but the excess pay did not result in increased productivity.

Question 12

The purchasing manager is often included in evaluating cost variances.

Accepted Answer

A) True 
 B)False

Question 13

Standard cost system-overhead variances
Assume the following data for John Company's August operations.   (a)Compute the amount of overhead applied to Work in Process during August.$________
(b)Compute the total manufacturing overhead budgeted based on hours worked during August.$________
(c)Compute the overhead spending variance for August.Indicate whether favorable (F)or unfavorable (U).$________
(d)Compute the overhead volume variance for August.Indicate whether favorable (F)or unfavorable (U).$________

Accepted Answer

The answer of Standard cost system-overhead variances
Assume the following data...

Question 14

An unfavorable cost variance will be debited to a cost variance account.

Accepted Answer

A) True 
 B)False

Question 15

An unfavorable volume variance in a factory is generally:

Accepted Answer

A) The responsibility of the production manager. 
B) Viewed as an idle capacity loss. 
C) The result of actual volume exceeding normal volume. 
D) Treated as part of the controllable factory overhead variance. 
A) The responsibility of the production manager. 
B) Viewed as an idle capacity loss. 
C) The result of actual volume exceeding normal volume. 
D) Treated as part of the controllable factory overhead variance.

Question 16

A large favorable variance from standard costs at the end of the year should be:

Accepted Answer

A) Carried forward to the next fiscal year. 
B) Shown as other income in the income statement. 
C) Added to cost of goods sold in the income statement. 
D) Allocated between ending inventories and cost of goods sold. 
A) Carried forward to the next fiscal year. 
B) Shown as other income in the income statement. 
C) Added to cost of goods sold in the income statement. 
D) Allocated between ending inventories and cost of goods sold.

Question 17

When standard costs are used in a cost accounting system:

Accepted Answer

A) A favorable cost variance results when standard amounts are less than actual costs. 
B) Cost variances are shown in the year-end balance sheet as assets,if favorable,or as liabilities,if unfavorable. 
C) Costs charged to the Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold accounts are actual costs. 
D) Costs charged to the Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold accounts are at standard costs. 
A) A favorable cost variance results when standard amounts are less than actual costs. 
B) Cost variances are shown in the year-end balance sheet as assets,if favorable,or as liabilities,if unfavorable. 
C) Costs charged to the Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold accounts are actual costs. 
D) Costs charged to the Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold accounts are at standard costs.

Question 18

The overhead spending variance:

Accepted Answer

A) Occurs automatically whenever actual production levels differ from the "normal" production level used to compute the standard overhead cost per unit. 
B) Is the difference between amounts spent for actual manufacturing overhead costs and the amount applied to production. 
C) Is computed as the difference between variable overhead per the flexible budget and actual variable overhead costs incurred. 
D) Is the portion of the total overhead variance that is considered "controllable" by the production manager. 
A) Occurs automatically whenever actual production levels differ from the "normal" production level used to compute the standard overhead cost per unit. 
B) Is the difference between amounts spent for actual manufacturing overhead costs and the amount applied to production. 
C) Is computed as the difference between variable overhead per the flexible budget and actual variable overhead costs incurred. 
D) Is the portion of the total overhead variance that is considered "controllable" by the production manager.

Question 19

Controlling the materials price variance is usually the responsibility of:

Accepted Answer

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

Question 20

Standard cost system labor variance
The following computations of March labor variances for Sam's Supply Company are incomplete.The missing items are labeled (a)through (d).If necessary,round your answers.
Labor rate variance = 4,800 hours × [(a)− $8.50] = $350 favorable
Labor efficiency variance = (b)× [5,000 hours − (c)] = $(d)
On the appropriately labeled line,identify each missing item by name (a through c)and show the missing value (a through d).Show supporting computations in the space provided.
(a)________ $________
(b)________ $________
(c)________ ________ hours
(d)$________ F or U (Circle the correct term. )
(e)During March,the supervisor left for vacation without arranging for a replacement.Which variances would have been most affected by this situation? ________
Computations

Accepted Answer

(a)Standard rate: $8.57
(b)Sta

Exam 24: Standard Cost Systems

The calculation of the labor rate variance is:

Which statement is true regarding a standard cost system?

If the actual cost per pound of direct material is less than the standard cost per pound,there is:

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 journal entry to record the cost of materials used includes:

Excessive overtime hours worked by direct labor workers often results in:

The use of inexpensive,low quality,materials often results in:

In evaluating cost variances,the accounting department determines whether variances are favorable or unfavorable.

Which of the following is the most likely explanation for the types of labor variances resulting from Roman's July operations?

The purchasing manager is often included in evaluating cost variances.

An unfavorable cost variance will be debited to a cost variance account.

An unfavorable volume variance in a factory is generally:

A large favorable variance from standard costs at the end of the year should be:

When standard costs are used in a cost accounting system:

The overhead spending variance:

Controlling the materials price variance is usually the responsibility of:

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