Question 1

Normal standards incorporate normal contingencies of production into the standards.

Accepted Answer

A) True 
 B)False

Question 2

Manufacturing overhead costs are applied to work in process on the basis of

Accepted Answer

A)  actual hours worked.
B)  standard hours allowed.
C)  ratio of actual variable to fixed costs.
D)  actual overhead costs incurred.

Question 3

A company purchases 20000 pounds of materials.The materials price variance is $4000 favorable.What is the difference between the standard and actual price paid for the materials?

Accepted Answer

A)  $1.00
B)  $0.20
C)  $5.00
D)  Cannot be determined from the data provided.

Question 4

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 5

Which of the following is true?

Accepted Answer

A)  The form content and frequency of variance reports vary considerably among companies.
B)  The form content and frequency of variance reports do not vary among companies.
C)  The form and content of variance reports vary considerably among companies but the frequency is always weekly.
D)  The form and content of variance reports are consistent among companies but the frequency varies.

Question 6

Standard cost is the industry average cost for a particular item.

Accepted Answer

A) True 
 B)False

Question 7

The total standard cost to produce one unit of product is shown

Accepted Answer

A)  at the bottom of the income statement.
B)  at the bottom of the balance sheet.
C)  on the standard cost card.
D)  in the Work in Process Inventory account.

Question 8

The investigation of a materials quantity variance usually begins in the

Accepted Answer

A)  production department.
B)  purchasing department.
C)  sales department.
D)  controller's department.

Question 9

Which of the following statements is true?

Accepted Answer

A)  Variances are the differences between total actual costs and total standard costs.
B)  When actual costs exceed standard costs the variance is favorable.
C)  An unfavorable variance results when actual costs are decreasing but standards are not changed.
D)  All of the above are true.

Question 10

The total variance is $35000.The total materials variance is $14000.The total labor variance is twice the total overhead variance.What is the total overhead variance?

Accepted Answer

A)  $3500
B)  $7000
C)  $10500
D)  $14000

Question 11

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 12

The per-unit standards for direct materials are 2 pounds at $5 per pound.Last month 11200 pounds of direct materials that actually cost $53000 were used to produce 6000 units of product.The direct materials quantity variance for last month was

Accepted Answer

A)  $4000 favorable.
B)  $3000 favorable.
C)  $4000 unfavorable.
D)  $7000 unfavorable.

Question 13

Most companies that use standards set them at

Accepted Answer

A)  the normal level.
B)  a conceivable level.
C)  the ideal level.
D)  last year's level.

Question 14

Marburg Co.expects direct materials cost of $6 per unit for 100000 units (a total of $600000 of direct materials costs).Marburg's standard direct materials cost and budgeted direct materials cost is
$\begin{array}{llcc}
 \underline{ \text { \quad\quad  Standard }}&\underline{    \text { \quad\quad\quad Budgeted } }
\end{array}$
a. $\begin{array}{llcc}
  \text { $ \$ 6 $ per unit  } &\text {\quad\quad $ \$ 600,000 $ per year } 
\end{array}$

b. $\begin{array}{llcc}
  \text { $ \$ 6 $ per unit } &   \text { \quad\quad$ \$ 6 $ per unit  } 
\end{array}$

c. $\begin{array}{llcc}
  \text {$ \$ 600,000 $ per year } &   \text { $ \$ 6 $ per unit  } 
\end{array}$

d.  $\begin{array}{llcc}
  \text {$ \$ 600,000 $ per year } &   \text { $ \$ 600,000 $ per year } 
\end{array}$

Accepted Answer

The answer of Marburg Co.expects direct materials cost of $6...

Question 15

Alex Co.prepared its income statement for management using a standard cost accounting system.Which of the following appears at the "standard" amount?

Accepted Answer

A)  Sales
B)  Selling expenses
C)  Gross profit
D)  Cost of goods sold

Question 16

If actual costs are greater than standard costs there is a(n)

Accepted Answer

A)  normal variance.
B)  unfavorable variance.
C)  favorable variance.
D)  error in the accounting system.

Question 17

Inventories cannot be valued at standard cost in financial statements.

Accepted Answer

A) True 
 B)False

Question 18

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 19

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 20

If a company is concerned with the potential negative effects of establishing standards it should

Accepted Answer

A)  set loose standards that are easy to fulfill.
B)  offer wage incentives to those meeting standards.
C)  not employ any standards.
D)  set tight standards in order to motivate people.

Exam 16: Activity Based Costing

The investigation of a materials quantity variance usually begins in the

Correct Answer
verified

Alex Co.prepared its income statement for management using a standard cost accounting system.Which of the following appears at the "standard" amount?

Correct Answer
verified

Which of the following is true?

Correct Answer
verified

The total variance is $35000.The total materials variance is $14000.The total labor variance is twice the total overhead variance.What is the total overhead variance?

Correct Answer
verified

If a company is concerned with the potential negative effects of establishing standards it should

Correct Answer
verified

Standard cost is the industry average cost for a particular item.

Correct Answer
verified

The total standard cost to produce one unit of product is shown

Correct Answer
verified

Correct Answer
verified

Inventories cannot be valued at standard cost in financial statements.

Correct Answer
verified

The per-unit standards for direct materials are 2 pounds at $5 per pound.Last month 11200 pounds of direct materials that actually cost $53000 were used to produce 6000 units of product.The direct materials quantity variance for last month was

Correct Answer
verified

The formula for the materials quantity variance is

Correct Answer
verified

Most companies that use standards set them at

Correct Answer
verified

Manufacturing overhead costs are applied to work in process on the basis of

Correct Answer
verified

A company purchases 20000 pounds of materials.The materials price variance is $4000 favorable.What is the difference between the standard and actual price paid for the materials?

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

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

Correct Answer
verified

A manufacturing company would include setup and downtime in their direct

Correct Answer
verified

In using variance reports management looks for

Correct Answer
verified

Normal standards incorporate normal contingencies of production into the standards.

Correct Answer
verified

If actual costs are greater than standard costs there is a(n)

Correct Answer
verified

Exam 16: Activity Based Costing

The investigation of a materials quantity variance usually begins in the

Correct AnswerverifiedShow Answer

Alex Co.prepared its income statement for management using a standard cost accounting system.Which of the following appears at the "standard" amount?

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

The total variance is $35000.The total materials variance is $14000.The total labor variance is twice the total overhead variance.What is the total overhead variance?

Correct AnswerverifiedShow Answer

If a company is concerned with the potential negative effects of establishing standards it should

Correct AnswerverifiedShow Answer

Standard cost is the industry average cost for a particular item.

Correct AnswerverifiedShow Answer

The total standard cost to produce one unit of product is shown

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Inventories cannot be valued at standard cost in financial statements.

Correct AnswerverifiedShow Answer

The per-unit standards for direct materials are 2 pounds at $5 per pound.Last month 11200 pounds of direct materials that actually cost $53000 were used to produce 6000 units of product.The direct materials quantity variance for last month was

Correct AnswerverifiedShow Answer

The formula for the materials quantity variance is

Correct AnswerverifiedShow Answer

Most companies that use standards set them at

Correct AnswerverifiedShow Answer

Manufacturing overhead costs are applied to work in process on the basis of

Correct AnswerverifiedShow Answer

A company purchases 20000 pounds of materials.The materials price variance is $4000 favorable.What is the difference between the standard and actual price paid for the materials?

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A manufacturing company would include setup and downtime in their direct

Correct AnswerverifiedShow Answer

In using variance reports management looks for

Correct AnswerverifiedShow Answer

Normal standards incorporate normal contingencies of production into the standards.

Correct AnswerverifiedShow Answer

If actual costs are greater than standard costs there is a(n)

Correct AnswerverifiedShow Answer

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