Question 1

Clark Company manufactures a product with a standard direct labor cost of two hours at $18.00 per hour. During July, 2,000 units were produced using 4,200 hours at $18.30 per hour. The labor price variance was

Accepted Answer

A)  $1,260 U. 
B)  $4,860 U. 
C)  $4,860 F. 
D)  $3,600 U.

Question 2

It is possible that a company's financial statements may report inventories at

Accepted Answer

A)  budgeted costs. 
B)  standard costs. 
C)  both budgeted and standard costs. 
D)  None of these answers are correct.

Question 3

A standard which represents an efficient level of performance that is attainable under expected operating conditions is called a(n)

Accepted Answer

A)  ideal standard. 
B)  loose standard. 
C)  tight standard. 
D)  normal standard.

Question 4

Use the following information for questions 
Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively.
-The standard direct labor rate per hour is

Accepted Answer

A)  $ 12.00. 
B)  $ 12.30. 
C)  $15.60. 
D)  $15.90.

Question 5

The formula for the materials quantity variance is

Accepted Answer

A)  (SQ × AP) - (SQ × SP). 
B)  (AQ × AP) - (AQ × SP). 
C)  (AQ × SP) - (SQ × SP). 
D)  (AQ × AP) - (SQ × SP).

Question 6

In using variance reports, management looks for

Accepted Answer

A)  total assets invested. 
B)  significant variances. 
C)  competitors' costs in comparison to the company's costs. 
D)  more efficient ways of valuing inventories.

Question 7

All Urban Company produces a product requiring 4 pounds of material costing $3.50 per pound. During December, All Urban purchased 4,200 pounds of material for $14,112 and used the material to produce 500 products. What was the materials price variance for December?

Accepted Answer

A)  $560 F 
B)  $588 F 
C)  $112 U 
D)  $672 U

Question 8

Setting standard costs is relatively simple because it is done entirely by accountants.

Accepted Answer

A) True 
 B)False

Question 9

Standard costs may be incorporated into the accounts in the general ledger.

Accepted Answer

A) True 
 B)False

Question 10

The use of standard costs in inventory costing is prohibited in financial statements.

Accepted Answer

A) True 
 B)False

Question 11

A manufacturing company would include setup and downtime in their direct

Accepted Answer

A)  materials price standard. 
B)  materials quantity standard. 
C)  labor price standard. 
D)  labor quantity standard.

Question 12

If the materials price variance is $3,600 F and the materials quantity and labor variances are each $2,700 U, what is the total materials variance?

Accepted Answer

A)  $3,600 F 
B)  $2,700 U 
C)  $900 F 
D)  $4,050 U

Question 13

All of the following are advantages of standard costs except they

Accepted Answer

A)  facilitate management planning. 
B)  are useful in setting selling prices. 
C)  simplify costing in inventories. 
D)  increase net income.

Question 14

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon's total variance is

Accepted Answer

A)  $450 F. 
B)  $135 U. 
C)  $465 U. 
D)  $600 U.

Question 15

Which of the following statements is false?

Accepted Answer

A)  A standard cost is more accurate than a budgeted cost. 
B)  A standard is a unit amount. 
C)  In concept, standards and budgets are essentially the same. 
D)  The standard cost of a product is equivalent to the budgeted cost per unit of product.

Question 16

If actual direct materials costs are greater than standard direct materials costs, it means that

Accepted Answer

A)  actual costs were calculated incorrectly. 
B)  the actual unit price of direct materials was greater than the standard unit price of direct materials. 
C)  the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected. 
D)  the purchasing agent or the production foreman is inefficient.

Question 17

The difference between a budget and a standard is that

Accepted Answer

A)  a budget expresses what costs were, while a standard expresses what costs should be. 
B)  a budget expresses management's plans, while a standard reflects what actually happened. 
C)  a budget expresses a total amount, while a standard expresses a unit amount. 
D)  standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system.

Question 18

Which of the following statements about overhead variances is false?

Accepted Answer

A)  Standard hours allowed are used in calculating the controllable variance. 
B)  Standard hours allowed are used in calculating the volume variance. 
C)  The controllable variance pertains solely to fixed costs. 
D)  The total overhead variance pertains to both variable and fixed costs.

Question 19

The total overhead variance is the difference between the

Accepted Answer

A)  actual overhead costs and overhead costs applied based on standard hours allowed. 
B)  actual overhead costs and overhead costs applied based on actual hours. 
C)  overhead costs applied based on actual hours and overhead costs applied based on standard hours allowed. 
D)  the actual overhead costs and the standard direct labor costs.

Question 20

The overhead volume variance is

Accepted Answer

A)  actual overhead less overhead budgeted for actual hours. 
B)  actual overhead less overhead budgeted for standard hours allowed. 
C)  overhead budgeted for actual hours less applied overhead. 
D)  the fixed overhead rate times the difference between normal capacity hours and standard hours allowed.

Exam 11: Standard Costs and Balanced Scorecard

Clark Company manufactures a product with a standard direct labor cost of two hours at $18.00 per hour. During July, 2,000 units were produced using 4,200 hours at $18.30 per hour. The labor price variance was

It is possible that a company's financial statements may report inventories at

A standard which represents an efficient level of performance that is attainable under expected operating conditions is called a(n)

The formula for the materials quantity variance is

In using variance reports, management looks for

All Urban Company produces a product requiring 4 pounds of material costing $3.50 per pound. During December, All Urban purchased 4,200 pounds of material for $14,112 and used the material to produce 500 products. What was the materials price variance for December?

Setting standard costs is relatively simple because it is done entirely by accountants.

Standard costs may be incorporated into the accounts in the general ledger.

The use of standard costs in inventory costing is prohibited in financial statements.

A manufacturing company would include setup and downtime in their direct

If the materials price variance is $3,600 F and the materials quantity and labor variances are each $2,700 U, what is the total materials variance?

All of the following are advantages of standard costs except they

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon's total variance is

Which of the following statements is false?

If actual direct materials costs are greater than standard direct materials costs, it means that

The difference between a budget and a standard is that

Which of the following statements about overhead variances is false?

The total overhead variance is the difference between the

The overhead volume variance is