Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The total factory overhead cost variance is

Accepted Answer

A)   $4,866.75 unfavorable
B)   $4,866.75 favorable
C)   $8,981.75 favorable
D)   $8,981.75 unfavorable

Question 3

Calculate the direct materials price variance.

Accepted Answer

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

Question 4

One reason not to depend solely on historical records to set standards is that there may be inefficiencies contained in past costs.

Accepted Answer

A) True 
 B)False

Question 5

A budget performance report compares actual results with the budgeted amounts and reports differences for possible investigation.

Accepted Answer

A) True 
 B)False

Question 6

The fixed factory overhead volume variance is

Accepted Answer

A)   $1,701.00 favorable
B)   $4,866.75 unfavorable
C)   $1,701.00 unfavorable
D)   $4,866.75 favorable

Question 7

If the standard to produce a given amount of product is 2,000 units of direct materials at $12 and the actual was 1,600 units at $13,the direct materials quantity variance was $5,200 favorable.

Accepted Answer

A) True 
 B)False

Question 8

The direct labor time variance is

Accepted Answer

A)   $6,000 favorable
B)   $6,000 unfavorable
C)   $33,000 unfavorable
D)   $33,000 favorable

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.

Question 10

What is the amount of the variable factory overhead controllable variance?

Accepted Answer

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

Question 11

The total manufacturing cost variance consists of

Accepted Answer

A)   direct materials price variance,direct labor cost variance,and fixed factory overhead volume variance
B)   direct materials cost variance,direct labor rate variance,and factory overhead cost variance
C)   direct materials cost variance,direct labor cost variance,and variable factory overhead controllable variance
D)   direct materials cost variance,direct labor cost variance,and factory overhead cost variance

Question 12

While setting standards,managers should never allow for spoilage or machine breakdowns in their calculations.

Accepted Answer

A) True 
 B)False

Question 13

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 prices

Question 14

A company should only use nonfinancial performance measures when financial measures cannot be calculated.

Accepted Answer

A) True 
 B)False

Question 15

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12,the direct materials quantity variance was $2,200 unfavorable.

Accepted Answer

A) True 
 B)False

Question 16

Standards are set for only direct labor and direct materials.

Accepted Answer

A) True 
 B)False

Question 17

The total manufacturing cost variance is

Accepted Answer

A)   the difference between actual costs and standard costs for units produced
B)   the flexible budget variance plus the time variance
C)   the difference between planned costs and standard costs for units produced
D)   none of the answers are correct

Question 18

Calculate the direct labor rate variance.

Accepted Answer

A)   $4,488.75 unfavorable
B)   $6,851.25 favorable
C)   $4,488.75 favorable
D)   $6,851.25 unfavorable

Question 19

If the price paid per unit differs from the standard price per unit for direct materials,the variance is a

Accepted Answer

A)   variable variance
B)   controllable variance
C)   price variance
D)   volume variance

Question 20

Standard costs are divided into which of the following components?

Accepted Answer

A)   variance standard and quantity standard
B)   materials standard and labor standard
C)   quality standard and quantity standard
D)   price standard and quantity standard

Exam 22: Evaluating Variances From Standard Costs

One reason not to depend solely on historical records to set standards is that there may be inefficiencies contained in past costs.

Correct AnswerverifiedShow Answer

The standard price and quantity of direct materials are separated because

Correct AnswerverifiedShow Answer

Standards are set for only direct labor and direct materials.

Correct AnswerverifiedShow Answer

A budget performance report compares actual results with the budgeted amounts and reports differences for possible investigation.

Correct AnswerverifiedShow Answer

The fixed factory overhead volume variance is

Correct AnswerverifiedShow Answer

While setting standards,managers should never allow for spoilage or machine breakdowns in their calculations.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the standard to produce a given amount of product is 2,000 units of direct materials at $12 and the actual was 1,600 units at $13,the direct materials quantity variance was $5,200 favorable.

Correct AnswerverifiedShow Answer

The total manufacturing cost variance is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is the amount of the variable factory overhead controllable variance?

Correct AnswerverifiedShow Answer

Calculate the direct materials price variance.

Correct AnswerverifiedShow Answer

Calculate the direct labor rate variance.

Correct AnswerverifiedShow Answer

The total factory overhead cost variance is

Correct AnswerverifiedShow Answer

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12,the direct materials quantity variance was $2,200 unfavorable.

Correct AnswerverifiedShow Answer

Standard costs are divided into which of the following components?

Correct AnswerverifiedShow Answer

The direct labor time variance is

Correct AnswerverifiedShow Answer

The total manufacturing cost variance consists of

Correct AnswerverifiedShow Answer

If the price paid per unit differs from the standard price per unit for direct materials,the variance is a

Correct AnswerverifiedShow Answer

A company should only use nonfinancial performance measures when financial measures cannot be calculated.

Correct AnswerverifiedShow Answer

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