QUIZ 4

4. Which of the following statements regarding standard cost systems is true? a. Favorable variances are not necessarily good variances. b. Managers will investigate all variances from standard. c. The production supervisor is generally responsible for material price variances. d. Standard costs cannot be used for planning purposes since costs normally change in the future.

d. Standard costs cannot be used for planning purposes since costs normally change in the future.

3. The standard cost card contains quantities and costs for a. direct material only. b. direct labor only. c. direct material and direct labor only. d. direct material, direct labor, and overhead.

d. direct material, direct labor, and overhead.

12. An unfavorable fixed overhead volume variance is most often caused by a. actual fixed overhead incurred exceeding budgeted fixed overhead. b. an over-application of fixed overhead to production. c. an increase in the level of the finished inventory. d. normal capacity exceeding actual production levels

d. normal capacity exceeding actual production levels

8. The material price variance (computed at point of purchase) is a. the difference between the actual cost of material purchased and the standard cost of material purchased. b. the difference between the actual cost of material purchased and the standard cost of material used. c. primarily the responsibility of the production manager. d. both a and c

a. the difference between the actual cost of material purchased and the standard cost of material purchased.

9. A company would most likely have an unfavorable labor rate variance and a favorable labor efficiency variance if a. the mix of workers used in the production process was more experienced than the normal mix. b. the mix of workers used in the production process was less experienced than the normal mix. c. workers from another part of the plant were used due to an extra heavy production schedule. d. the purchasing agent acquired very high quality material that resulted in less spoilage.

a. the mix of workers used in the production process was more experienced than the normal mix.

1. Standard costs may be used for A product costing B. planning. C. controlling D. all of the above.

D. all of the above.

10. Management would generally expect unfavorable variances if standards were based on which of the following capacity measures? Ideal Practical Expected annual a. Yes No No b. No No Yes c. No Yes Yes d. No No No

Ideal Practical Expected annual a. Yes No No

5. In a standard cost system, Work in Process Inventory is ordinarily debited with a. actual costs of material and labor and a predetermined overhead cost for overhead. b. standard costs based on the level of input activity (such as direct labor hours worked). c. standard costs based on production output. d. actual costs of material, labor, and overhead.

a. actual costs of material and labor and a predetermined overhead cost for overhead.

2. A primary purpose of using a standard cost system is a. to make things easier for managers in the production facility. b. to provide a distinct measure of cost control. c. to minimize the cost per unit of production. d. b and c are correct.

b. to provide a distinct measure of cost control.

6. The term standard hours allowed measures a. budgeted output at actual hours. b. budgeted output at standard hours. c. actual output at standard hours. d. actual output at actual hours.

c. actual output at standard hours.

11. In a standard cost system, when production is greater than the estimated unit or denominator level of activity, there will be a(n) a. unfavorable capacity variance. b. favorable material and labor usage variance. c. favorable volume variance. d. unfavorable manufacturing overhead variance

c. favorable volume variance.

7. When computing variances from standard costs, the difference between actual and standard price multiplied by actual quantity used yields a a. combined price-quantity variance. b. price variance. c. quantity variance. d. mix variance.

c. quantity variance.