Question 1

The formula for the fixed overhead spending variance is:

Accepted Answer

A)  Standard fixed overhead rate × Standard Hours 
B)  AFOH - BFOH 
C)  Applied fixed overhead - budgeted fixed overhead 
D)  (AH - SH) × SVOR

Question 2

Quantity price standards

Accepted Answer

A)  are standard price multiplied by standard quantity. 
B)  specify how much of the quantity of input should be used for the standard price. 
C)  specify how much should be paid for the quantity of input to be used. 
D)  specify how much of the quantity of input should be used for the actual price.

Question 3

Figure 9-4
San Francisco Corporation uses two materials in the production of its product. The materials, X and Y, have the following standards:
  During April, the following actual production information was provided:
Material Actual Mix
X 30,000 units
Y 20,000 units
Yield 36,000 units
-Refer to Figure 9-4. What is the materials yield variance?

Accepted Answer

A)  $4,000 (F) 
B)  $4,000 (U) 
C)  $8,000 (F) 
D)  $8,000 (U)

Question 4

The unit quantity standards can be used to compute the total amount of inputs allowed for the actual output.

Accepted Answer

A) True 
 B)False

Question 5

Both manufacturing and service firms may use standard costing systems.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is NOT true about Kaizen Standards?

Accepted Answer

A)  Kaizen standards are the standards used for continuous improvement. 
B)  Kaizen standards are a currently attainable standard that reflects planned improvement. 
C)  Kaizen standards are constantly changing. 
D)  Kaizen standards are the standards used in traditional costing systems.

Question 7

All variances accounts are closed out at the end of the year.

Accepted Answer

A) True 
 B)False

Question 8

Standard costing

Accepted Answer

A)  establishes price and quantity standards for inputs. 
B)  provides journal entry support. 
C)  is not used in unit costing. 
D)  none of these.

Question 9

Figure 9-3
Alumni Manufacturing Company has the following information pertaining to a normal monthly activity of 10,000 units:
Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit. Standard factory overhead rates per direct labor hour are:
 
-Refer to Figure 9-3. What is the variable overhead spending variance for Alumni?

Accepted Answer

A)  $0 
B)  $4,000 (F) 
C)  $86,000 (U) 
D)  $10,000 (F)

Question 10

The total budget variances are categorized into price variances and usage variances.

Accepted Answer

A) True 
 B)False

Question 11

Figure 9-4
San Francisco Corporation uses two materials in the production of its product. The materials, X and Y, have the following standards:
  During April, the following actual production information was provided:
Material Actual Mix
X 30,000 units
Y 20,000 units
Yield 36,000 units
-Refer to Figure 9-4. What is the materials usage variance?

Accepted Answer

A)  $18,000 (U) 
B)  $ 8,000 (U) 
C)  $ 8,000 (F) 
D)  $10,000 (U)

Question 12

Price/rate variances focus on the differences between

Accepted Answer

A)  actual and standard inputs multiplied by actual prices. 
B)  actual and standard unit prices of an input multiplied by the actual quantity of inputs. 
C)  actual and standard inputs multiplied by standard prices. 
D)  actual and standard unit prices of an input multiplied by the budgeted quantity of inputs.

Question 13

Organics Corporation uses two different types of labor to manufacture its product. The types of labor, Cutting and Setup, have the following standards:
  During July, the following actual production information was provided:
Labor Type Actual Mix
Cutting 3,500 hours
Setup 1,500 hours
Yield 22,500 units
Required:
Calculate the labor mix and yield variances.

Accepted Answer

The answer of Organics Corporation uses two different types of...

Question 14

During October, 10,000 direct labor hours were worked at a standard cost of $10 per hour. If the direct labor rate variance for October was $4,000 unfavorable, the actual cost per direct labor hour must be

Accepted Answer

A)  $10.40. 
B)  $10.00. 
C)  $9.60. 
D)  $9.20.

Question 15

The costing that establishes price and quantity standards for inputs is called costing.

Accepted Answer

The answer of The costing that establishes price and quantity...

Question 16

Figure 9-2
Bodacious Corporation produced 100 units of Product AA. The total standard and actual costs for materials and direct labor for the 100 units of Product AA are as follows:
Materials: Standard Actual
Standard: 200 pounds at $3.00 per pound $600
Actual: 220 pounds at $2.85 per pound $627
Direct labor:
Standard: 400 hours at $15.00 per hour 6,000
Actual: 368 hours at $16.50 per hour 6,072
-A materials price variance would NOT be caused by

Accepted Answer

A)  ordering the wrong quality of materials. 
B)  ordering from the wrong supplier. 
C)  not taking a quantity discount. 
D)  requiring laborers to work overtime.

Question 17

Montana Company uses a standard costing system. The following information pertains to direct labor costs for the month of February: Standard direct labor rate per hour $15.00
Actual direct labor rate per hour $13.50
Labor rate variance $18,000 favorable
Actual output 1,000 units
Standard hours allowed for actual production 10,000 hours
What is the total labor budget variance for Montana Company?

Accepted Answer

A)  $18,000 (F) 
B)  $12,000 (U) 
C)  $18,000 (U) 
D)  $12,000 (F)

Question 18

During September, 12,000 pounds of materials were purchased at a cost of $8 per pound. If there was an unfavorable direct materials price variance of $6,000 for June, the standard cost per pound must be

Accepted Answer

A)  $8.50. 
B)  $8.00. 
C)  $7.00. 
D)  $7.50.

Question 19

All of the following are true of currently attainable standards EXCEPT

Accepted Answer

A)  Currently attainable standards are based on an efficiently operating work force. 
B)  Currently attainable standards are based on ideal conditions. 
C)  Currently attainable standards allow for downtime and rest periods. 
D)  Currently attainable standards are based on present production processes and technology.

Question 20

The following information is provided about three materials utilized in the production of a product: Material Standard Mix Standard Unit Price Standard Cost
X 1,250 units $3.00 per unit $3,750
Y 750 units 5.00 per unit $3,750
Z 500 units 4.00 per unit $2,000
Yield 2,250 units
During May, the following actual production information was provided:
Material Actual Mix
X 10,000 units
Y 5,000 units
Z 2,500 units
Yield 15,000 units
What is the Material yield variance.

Accepted Answer

A)  $3,167(F) 
B)  $3,167(U) 
C)  $6,333(F) 
D)  $6,333(U)

Exam 9: Standard Costing: a Functional-Based Control Approach

The formula for the fixed overhead spending variance is:

Quantity price standards

The unit quantity standards can be used to compute the total amount of inputs allowed for the actual output.

Both manufacturing and service firms may use standard costing systems.

Which of the following is NOT true about Kaizen Standards?

All variances accounts are closed out at the end of the year.

Standard costing

The total budget variances are categorized into price variances and usage variances.

Price/rate variances focus on the differences between

During October, 10,000 direct labor hours were worked at a standard cost of $10 per hour. If the direct labor rate variance for October was $4,000 unfavorable, the actual cost per direct labor hour must be

The costing that establishes price and quantity standards for inputs is called costing.

During September, 12,000 pounds of materials were purchased at a cost of $8 per pound. If there was an unfavorable direct materials price variance of $6,000 for June, the standard cost per pound must be

All of the following are true of currently attainable standards EXCEPT