Chapter 11- Acct.

Standards differ from budgets in that: (a)budgets but not standards may be used in valuing inventories. (b)budgets but not standards may be journalized and posted. (c)budgets are a total amount and standards are a unit amount. (d)only budgets contribute to management planning and control.

(c)budgets are a total amount and standards are a unit amount.

Generally accepted accounting principles allow a company to: (a)report inventory at standard cost but cost of goods sold must be reported at actual cost. (b)report cost of goods sold at standard cost but inventory must be reported at actual cost. (c)report inventory and cost of goods sold at standard cost as long as there are no significant differences between actual and standard cost. (d)report inventory and cost of goods sold only at actual costs; standard costing is never permitted.

(c)report inventory and cost of goods sold at standard cost as long as there are no significant differences between actual and standard cost. GAAP allows a company to report both inventory and cost of goods sold at standard cost as long as there are no significant differences between actual and standard cost

Which of the following would not be an objective used in the customer perspective of the balanced scorecard approach? (a)Percentage of customers who would recommend product to a friend. (b)Customer retention. (c)Brand recognition. (d)Earnings per share.

(d)Earnings per share. Earnings per share is not an objective used in the customer perspective of the balanced scorecard approach.

A favorable variance a. is an indication that the company is not operating in an optimal manner. b. implies a positive result if quality control standards are met. c. implies a positive result if standards are flexible. d. means that standards are too loosely specified.

b. implies a positive result if quality control standards are met.

If actual direct materials costs are greater than standard direct materials costs, it means that a. actual costs were calculated incorrectly. b. the actual unit price of direct materials was greater than the standard unit price of direct materials. c. the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected. d. the purchasing agent or the production foreman is inefficient.

c. the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected.

. The purchasing agent of the Poplin, Inc. ordered materials of lower quality in an effort to economize on price. What variance will most likely result? a. Favorable materials quantity variance b. Favorable total materials variance c. Unfavorable materials price variance d. Unfavorable labor quantity variance

d. unfavorable labor quantity variance

The formula for computing the total overhead variance is: (a)actual overhead less overhead applied. (b)overhead budgeted less overhead applied. (c)actual overhead less overhead budgeted. (d)No correct answer is given.

(a)actual overhead less overhead applied. Total overhead variance equals actual overhead less overhead applied.

Which of the following is incorrect about variance reports? (a)They facilitate "management by exception." (b)They should only be sent to the top level of management. (c)They should be prepared as soon as possible. (d)They may vary in form, content, and frequency among companies.

(b)They should only be sent to the top level of management. Variance reports should be sent to the level of management responsible for the area in which the variance occurred so it can be remedied as quickly as possible. The other choices are correct statements.

The setting of standards is: (a)a managerial accounting decision. (b)a management decision. (c)a worker decision. (d)preferably set at the ideal level of performance.

(b)a management decision. Standards are set by management. The other choices are incorrect because setting standards requires input from (a) managerial accountants and (c) sometimes workers, but the final decision is made by management. Choice (d) is incorrect because setting standards at the ideal level of performance is uncommon because of the perceived negative effect on worker morale.

Standard costs: (a)are imposed by governmental agencies. (b)are predetermined unit costs which companies use as measures of performance. (c)can be used by manufacturing companies but not by service or not-for-profit companies. (d)All of the above.

(b)are predetermined unit costs which companies use as measures of performance.

Which of the following is incorrect about a standard cost accounting system? (a)It is applicable to job order costing. (b)It is applicable to process costing. (c)It reports only favorable variances. (d)It keeps separate accounts for each variance.

(c)It reports only favorable variances. A standard cost accounting system reports both favorable and unfavorable variances

Which of the following is correct about the total overhead variance? (a)Budgeted overhead and overhead applied are the same. (b)Total actual overhead is composed of variable overhead, fixed overhead, and period costs. (c)Standard hours actually worked are used in computing the variance. (d)Standard hours allowed for the work done is the measure used in computing the variance.

(d)Standard hours allowed for the work done is the measure used in computing the variance. Standard hours allowed for work done is the measure used in computing the variance. The other choices are incorrect because (a) budgeted overhead is used to calculate the predetermined overhead rate while overhead applied is equal to standard hours allowed times the predetermined overhead rate, (b) overhead is a product cost and does not include period costs, and (c) standard hours allowed, not hours actually worked, are used in computing the overhead variance.

In using variance reports to evaluate cost control, management normally looks into: (a)all variances. (b)favorable variances only. (c)unfavorable variances only. (d)both favorable and unfavorable variances that exceed a predetermined quantitative measure such as a percentage or dollar amoun

(d)both favorable and unfavorable variances that exceed a predetermined quantitative measure such as a percentage or dollar amount.

The advantages of standard costs include all of the following except: (a)management by exception may be used. (b)management planning is facilitated. (c)they may simplify the costing of inventories. (d)management must use a static budget.

(d)management must use a static budget.

Variances from standards are a. expressed in total dollars. b. expressed on a per-unit basis. c. expressed on a percentage basis. d. All of these answers are correct.

a. expressed in total dollars.

A total materials variance is analyzed in terms of a. price and quantity variances. b. buy and sell variances. c. quantity and quality variances. d. tight and loose variances.

a. price and quantity variances.

. If actual costs are greater than standard costs, there is a(n) a. normal variance. b. unfavorable variance. c. favorable variance. d. error in the accounting system.

b. unfavorable variance.

Which one of the following statements is true? a. If the materials price variance is unfavorable, then the materials quantity variance must also be unfavorable. b. If the materials price variance is unfavorable, then the materials quantity variance must be favorable. c. Price and quantity variances move in the same direction. If one is favorable, the others will be as well. d. There is no correlation of favorable or unfavorable for price and quantity variances

d. There is no correlation of favorable or unfavorable for price and quantity variances.

The purchasing agent of the Poplin, Inc. ordered materials of lower quality in an effort to economize on price. What variance will most likely result? a. Favorable materials quantity variance b. Favorable total materials variance c. Unfavorable materials price variance d. Unfavorable labor quantity variance

d. Unfavorable labor quantity variance

The total materials variance is equal to the a. materials price variance. b. difference between the materials price variance and materials quantity variance. c. product of the materials price variance and the materials quantity variance. d. sum of the materials price variance and the materials quantity variance.

d. sum of the materials price variance and the materials quantity variance.