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If employees are given bonuses for exceeding normal standards, the standards may be very effective in motivating employees.

A) True
B) False

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Standard costs are a useful management tool that can be used solely as a statistical device apart from the ledger or they can be incorporated in the accounts.

A) True
B) False

Correct Answer

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Match the following descriptions with the term (a-e) it describes:

Premises
theoretical standard
actual cost
actual cost > standard cost at actual volumes
an example is the number of customer complaints
normal standard
Responses
Ideal standard
Currently attainable standard
Favorable cost variance
Unfavorable cost variance
Nonfinancial performance measure

Correct Answer

theoretical standard
Ideal standard
actual cost
Favorable cost variance
actual cost > standard cost at actual volumes
Unfavorable cost variance
an example is the number of customer complaints
Nonfinancial performance measure
normal standard
Currently attainable standard

The fact that workers are unable to meet a properly determined direct labor standard is sufficient cause to change the standard.

A) True
B) False

Correct Answer

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The following data relate to direct materials costs for February: Materials cost per yard: standard, $2.00; actual, $2.10 Standard yards per unit: standard, 4.5 yards; actual, 4.75 yards Units of production: 9,500 Calculate the direct materials price variance.


A) $1,795.50 favorable
B) $378.00 favorable
C) $4,512.50 unfavorable
D) $378.00 unfavorable

E) B) and D)
F) B) and C)

Correct Answer

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Prepare an income statement for the year ended December 31, through the gross profit for Baxter Company using the following information. Baxter Company sold 8,600 units at $125 per unit. Normal production is 9,000 units. (Do not round fixed overhead rate calculation when determining fixed factory overhead volume variance.) Prepare an income statement for the year ended December 31, through the gross profit for Baxter Company using the following information. Baxter Company sold 8,600 units at $125 per unit. Normal production is 9,000 units. (Do not round fixed overhead rate calculation when determining fixed factory overhead volume variance.)

Correct Answer

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*(5 × $6.30) + (2....

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Match the following formulas or descriptions with the term (a-e) it defines.

Premises
(Actual rate per hour - Standard rate per hour) × Actual hours
(Actual direct hours - Standard direct hours) × Standard rate per hour
Standard variable overhead for actual units produced
(Actual price - Standard price) × Actual quantity
(Actual quantity - Standard quantity) × Standard price
Responses
Direct labor rate variance
Direct materials quantity variance
Direct labor time variance
Direct materials price variance
Budgeted variable factory overhead

Correct Answer

(Actual rate per hour - Standard rate per hour) × Actual hours
(Actual direct hours - Standard direct hours) × Standard rate per hour
Standard variable overhead for actual units produced
(Actual price - Standard price) × Actual quantity
(Actual quantity - Standard quantity) × Standard price

The following data relate to direct materials costs for February: Materials cost per yard: standard, $2.00; actual, $2.10 Standard yards per unit: standard, 4.5 yards; actual, 4.75 yards Units of production: 9,500 Calculate the direct materials quantity variance.


A) $4,512.50 unfavorable
B) $4,512.50 favorable
C) $4,750.00 unfavorable
D) $4,750.00 favorable

E) A) and B)
F) C) and D)

Correct Answer

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The formula to compute the direct materials price variance is to calculate the difference between


A) Actual costs - (Actual quantity × Standard price)
B) Actual cost + Standard costs
C) Actual cost - Standard costs
D) (Actual quantity × Standard price) - Standard costs

E) A) and D)
F) B) and C)

Correct Answer

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An example of a nonfinancial measure is the number of customer complaints.

A) True
B) False

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If at the end of the fiscal year, the variances from standard are significant, the variances should be transferred to the


A) work in process account
B) cost of goods sold account
C) finished goods account
D) work in process, cost of goods sold, and finished goods accounts

E) B) and C)
F) None of the above

Correct Answer

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The standard price and quantity of direct materials are separated because


A) GAAP and IFRS reporting requires separation
B) direct materials prices are controlled by the purchasing department and quantity used is controlled by the production department
C) standard prices are more difficult to estimate than standard quantities
D) standard quantities change more frequently than standard prices

E) B) and C)
F) A) and D)

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The variance from standard for factory overhead resulting from incurring a total amount of factory overhead cost that is greater or less than the amount budgeted for the level of operations achieved is termed controllable variance.

A) True
B) False

Correct Answer

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Standards that represent levels of operation that can be attained with reasonable effort are called


A) theoretical standards
B) ideal standards
C) variable standards
D) normal standards

E) C) and D)
F) A) and B)

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D

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: What is the amount of the variable factory overhead controllable variance? A) $12,000 unfavorable B) $12,000 favorable C) $14,000 unfavorable D) $26,000 unfavorable What is the amount of the variable factory overhead controllable variance?


A) $12,000 unfavorable
B) $12,000 favorable
C) $14,000 unfavorable
D) $26,000 unfavorable

E) B) and C)
F) A) and B)

Correct Answer

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Which of the following conditions normally would not indicate that standard costs should be revised?


A) The engineering department has revised product specifications in responding to customer suggestions.
B) The company has signed a new union contract that increases the factory wages on average by $3.50 an hour.
C) Actual costs differed from standard costs for the preceding week.
D) The average price of raw materials increased from $4.68 per pound to $4.82 per pound.

E) A) and B)
F) None of the above

Correct Answer

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Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as follows: Actual costs: 1,550 lbs. at $9.10 Standard costs: 1,600 lbs. at $9.00 Determine the direct materials: (a) quantity variance (b) price variance (c) total cost variance.

Correct Answer

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The following data relate to direct labor costs for March: Rate: standard, $12.00; actual, $12.25 Hours: standard, 18,500; actual, 17,955 Units of production: 9,450 Calculate the direct labor time variance.


A) $2,362.50 favorable
B) $2,362.50 unfavorable
C) $6,540.00 favorable
D) $6,540.00 unfavorable

E) A) and D)
F) A) and C)

Correct Answer

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The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. The materials price variance is


A) $0
B) $59,400 unfavorable
C) $59,400 favorable
D) $6,000 unfavorable

E) A) and D)
F) A) and C)

Correct Answer

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The following data is given for the Zoyza Company: The following data is given for the Zoyza Company: Overhead is applied on standard labor hours. The variable factory overhead controllable variance is A) $73,250 favorable B) $73,250 unfavorable C) $59,400 favorable D) $59,400 unfavorable Overhead is applied on standard labor hours. The variable factory overhead controllable variance is


A) $73,250 favorable
B) $73,250 unfavorable
C) $59,400 favorable
D) $59,400 unfavorable

E) A) and D)
F) B) and D)

Correct Answer

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B

Showing 1 - 20 of 166

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