Question 1

At the end of the fiscal year, variances from standard costs are usually transferred to the

Accepted Answer

A)  direct labor account
B)  factory overhead account
C)  cost of goods sold account
D)  direct materials accountE) A) and B)
F) A) and D)

Question 2

A company records its inventory purchases at standard cost but also records purchase price variances.The company purchased 5,000 widgets at $8.00 each, and the standard cost for the widgets is $7.60.Which of the following would be included in the journal entry?

Accepted Answer

A)  debit Accounts Payable, $38,000
B)  credit Direct Materials Price Variance, $2,000
C)  debit Accounts Payable, $2,000
D)  debit Direct Materials Price Variance, $2,000E) C) and D)
F) B) and C)

Question 3

The following data relate to direct labor costs for the current period: Standard costs 9,000 hours at $5.50
Actual costs 8,500 hours at $5.75
What is the direct labor rate variance?

Accepted Answer

A)  $2,250 unfavorable
B)  $2,125 unfavorable
C)  $2,250 favorable
D)  $2,125 favorableE) None of the above
F) C) and D)

Question 4

The standard price and quantity of direct materials are separated because

Accepted Answer

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 pricesE) B) and C)
F) A) and D)

Question 5

Normally, standard costs should be revised when labor rates change to incorporate new union contracts.

Accepted Answer

A) True 
 B)False

Question 6

Periodic comparisons between planned objectives and actual performance are reported in:

Accepted Answer

A)  zero-base reports
B)  budget performance reports
C)  master budgets
D)  budgetsE) All of the above
F) B) and C)

Question 7

A favorable cost variance occurs when

Accepted Answer

A)  actual costs are more than standard costs
B)  standard costs are more than actual costs
C)  standard costs are less than actual costs
D)  actual costs are the same as standard costsE) C) and D)
F) A) and D)

Question 8

The materials price variance is

Accepted Answer

A)  $0
B)  $59,400 unfavorable
C)  $59,400 favorable
D)  $6,000 unfavorableE) B) and D)
F) All of the above

Question 9

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

Accepted Answer

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) All of the above
F) A) and C)

Question 10

The principle of exceptions allows managers to focus on correcting variances between

Accepted Answer

A)  standard costs and actual costs
B)  variable costs and actual costs
C)  competitor's costs and actual costs
D)  competitor's costs and standard costsE) C) and D)
F) None of the above

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

The following are inputs and outputs to the help desk:
operator training
number of calls per day
maintenance of computer equipment
number of operators
number of complaints
Identify whether each is an input or an output to the help desk.

Accepted Answer

operator training - input
numb...

Question 13

A variable cost system is an accounting system where standards are set for each manufacturing cost element.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would not lend itself to applying direct labor variances?

Accepted Answer

A)  help desk assistant
B)  research and development scientist
C)  customer service personnel
D)  telemarketerE) None of the above
F) A) and B)

Question 15

The principle of exceptions allows managers to focus on correcting variances between standard costs and actual costs.

Accepted Answer

A) True 
 B)False

Question 16

Prepare an income statement through income before income tax for presentation to management, using the following data from the records of Greenway Manufacturing Company for November of the current year:

Accepted Answer

The answer of Prepare an income statement through income before...

Question 17

Accounting systems that use standards for product costs are called budgeted cost systems.

Accepted Answer

A) True 
 B)False

Question 18

The formula to compute the direct labor rate variance is to calculate the difference between

Accepted Answer

A)  Actual costs + Actual hours × Standard rate
B)  Actual costs - Standard cost
C)  Actual hours × Standard rate - Standard costs
D)  Actual costs - Actual hours × Standard rateE) B) and D)
F) B) and C)

Question 19

What is the amount of the fixed factory overhead volume variance?

Accepted Answer

A)  $12,500 favorable
B)  $10,000 unfavorable
C)  $12,500 unfavorable
D)  $10,000 favorableE) B) and C)
F) A) and B)

Question 20

Compute the standard cost for one pair of boots, based on the following standards for each pair of boots:
Standard material quantity: 1.25 yards of leather at $35.00 per yard
Standard labor: 9 hours at $25.75 per hour
Factory overhead: $1.75 per direct labor hour

Accepted Answer

The answer of Compute the standard cost for one pair...

Exam 7: Performance Evaluation Using Variances From Standard Costs

Compute the standard cost for one pair of boots, based on the following standards for each pair of boots: Standard material quantity: 1.25 yards of leather at $35.00 per yard Standard labor: 9 hours at $25.75 per hour Factory overhead: $1.75 per direct labor hour

Correct AnswerverifiedShow Answer

The principle of exceptions allows managers to focus on correcting variances between

Correct AnswerverifiedShow Answer

The materials price variance is

Correct AnswerverifiedShow Answer

Accounting systems that use standards for product costs are called budgeted cost systems.

Correct AnswerverifiedShow Answer

The standard price and quantity of direct materials are separated because

Correct AnswerverifiedShow Answer

Periodic comparisons between planned objectives and actual performance are reported in:

Correct AnswerverifiedShow Answer

A favorable cost variance occurs when

Correct AnswerverifiedShow Answer

Normally, standard costs should be revised when labor rates change to incorporate new union contracts.

Correct AnswerverifiedShow Answer

What is the amount of the fixed factory overhead volume variance?

Correct AnswerverifiedShow Answer

The formula to compute the direct labor rate variance is to calculate the difference between

Correct AnswerverifiedShow Answer

Prepare an income statement through income before income tax for presentation to management, using the following data from the records of Greenway Manufacturing Company for November of the current year:

Correct AnswerverifiedShow Answer

The following are inputs and outputs to the help desk: operator training number of calls per day maintenance of computer equipment number of operators number of complaints Identify whether each is an input or an output to the help desk.

Correct Answerverifiedoperator training - inputnumb...View AnswerShow Answer

A company records its inventory purchases at standard cost but also records purchase price variances.The company purchased 5,000 widgets at $8.00 each, and the standard cost for the widgets is $7.60.Which of the following would be included in the journal entry?

Correct AnswerverifiedShow Answer

At the end of the fiscal year, variances from standard costs are usually transferred to the

Correct AnswerverifiedShow Answer

A variable cost system is an accounting system where standards are set for each manufacturing cost element.

Correct AnswerverifiedShow Answer

Which of the following would not lend itself to applying direct labor variances?

Correct AnswerverifiedShow Answer

The principle of exceptions allows managers to focus on correcting variances between standard costs and actual costs.

Correct AnswerverifiedShow Answer

The following data relate to direct labor costs for the current period: Standard costs 9,000 hours at $5.50 Actual costs 8,500 hours at $5.75 What is the direct labor rate variance?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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operator training - input
numb...
View Answer

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