Chapter 8: Standard Costs and Variances

The variable overhead efficiency variance is caused by the difference between which of the following? A. actual and budgeted units B. actual and standard allocation base C. actual and standard overhead rates D. actual units and actual overhead rates

A

This standard is set at a level that could be achieved if everything ran perfectly. A. ideal standard B. attainable standard C. unattainable standard D. variance from standard

A

This variance is the difference involving spending less, or using less than the standard amount. A. favorable variance B. unfavorable variance C. no variance D. variance

A

When is the direct labor time variance unfavorable? A. when the actual quantity used is greater than the standard quantity B. when the actual quantity used is less than the standard quantity C. when the actual price paid is greater than the standard price D. when the actual price is less than the standard price

A

When is the material quantity unfavorable? A. when the actual quantity used is greater than the standard quantity B. when the actual quantity used is less than the standard quantity C. when the actual price paid is greater than the standard price D. when the actual price is less than the standard price

A

Which of the following is a possible cause of an unfavorable material quantity variance? A. purchasing substandard material B. hiring higher-quality workers C. paying more than should have for workers D. purchasing too much material

A

Why does a company use a standard costing system? A. to identify variances from the actual cost that assist them in maintaining profits B. to identify nonperformers in the workplace C. to identify what vendors are unreliable D. to identify defective materials

A

The variable overhead rate variance is caused by the sum between which of the following? A. actual and standard allocation base B. actual and standard overhead rates C. actual and budgeted units D. actual units and actual overhead rates

B

This standard is set at a level that may be reached with reasonable effort. A. ideal standard B. attainable standard C. unattainable standard D. variance from standard

B

This variance is the difference involving spending more or using more than the standard amount. A. favorable variance B. unfavorable variance C. no variance D. variance

B

What are some possible reasons for a direct labor time variance? A. utility usage decrease B. less qualified workers C. office supplies spending D. sales decline

B

When is the material quantity variance favorable? A. when the actual quantity used is greater than the standard quantity B. when the actual quantity used is less than the standard quantity C. when the actual price paid is greater than the standard price D. when the actual price is less than the standard price

B

Which of the following is a possible cause of an unfavorable labor efficiency variance? A. hiring substandard workers B. making too many units C. buying higher-quality material D. paying too much for workers

B

When is the labor rate variance favorable? A. when the actual quantity used is greater than the standard quantity B. when the actual quantity used is less than the standard quantity C. when the actual price is greater than the standard price D. when the actual price is less than the standard price

D

Which of the following is a possible cause of an unfavorable material price variance? A. purchasing too much material B. purchasing higher-quality material C. hiring substandard workers D. buying substandard material

D

total direct labor variance

actual labor costs compared to standard labor costs

total direct materials cost variance

difference between actual materials cost and standard materials cost

variance

difference between standard and actual performance

fixed factory overhead variance

difference between the actual fixed overhead and applied fixed overhead

variable overhead efficiency variance

difference between the actual hours worked and the standard hours expected for the units produced

direct labor time variance

difference between the actual hours worked and the standard hours that should have been worked for the actual units produced

total variable overhead cost variance

total cost variance found by combining variable overhead rate variance and variable overhead efficiency variance

When is the material price variance favorable? A. when the actual quantity used is greater than the standard quantity B. when the actual quantity used is less than the standard quantity C. when the actual price paid is greater than the standard price D. when the actual price is less than the standard price

D

standard

expectation for a component used in production

A flexible budget ________. A. predicts estimated revenues and costs at varying levels of production B. gives actual figures for selling price C. gives actual figures for variable and fixed overhead D. is not used in overhead variance calculations

A

Which of the following is a possible cause of an unfavorable labor rate variance? A. hiring too many workers B. hiring higher-quality workers at a higher wage C. making too many units D. purchasing too much material

B

When is the direct labor time variance favorable? A. when the actual quantity used is greater than the standard quantity B. when the actual quantity used is less than the standard quantity C. when the actual price paid is greater than the standard price D. when the actual price is less than the standard price

B OR D

The fixed factory overhead variance is caused by the difference between which of the following? A. actual and standard allocation base B. actual and budgeted units C. actual fixed overhead and applied fixed overhead D. actual and standard overhead rates

C

What are some reasons for a material quantity variance? A. building rental charges increase B. labor rate decreases C. more qualified workers D. change in the actual cost of materials

C

When is the labor rate variance unfavorable? A. when the actual quantity used is greater than the standard quantity B. when the actual quantity used is less than the standard quantity C. when the actual price paid is greater than the standard price D. when the actual price is less than the standard price

C

What are some possible reasons for a labor rate variance? A. hiring of less qualified workers B. an excess of material usage C. material price increase D. utilities usage change

A

When is the material price variance unfavorable? A. when the actual quantity used is greater than the standard quantity B. when the actual quantity used is less than the standard quantity C. when the actual price paid is greater than the standard price D. when the actual price is less than the standard price

C

standard cost

cost expectation for price paid and amount (quantities) used

direct materials variance

difference between the actual price or amount used and the standard amount

direct materials price variance

difference between the actual price paid per unit for materials and what should have been paid per the standards

direct materials quantity variance

difference between the actual quantity of materials used and the standard materials that were expected to be used to make the actual units produced

direct labor rate variance

difference between the actual rate paid and the standard rate that should have been paid based on the actual hours worked

variable overhead rate variance

difference between the actual variable manufacturing overhead and the variable overhead that was expected given the number of hours worked

favorable variance

difference involving spending less, or using less, than the standard amount

unfavorable variance

difference involving spending more or using more than the standard amount

What are some possible reasons for a material price variance? A. substandard material B. labor rate increases C. labor rate decreases D. labor efficiency

A

ideal standard

level that could be achieved if everything ran perfectly

attainable standard

level that may be reached with reasonable effort

flexible budget

measurement and prediction of estimated revenues and costs at varying levels of production

direct labor variance

measures how efficiently the company uses labor as well as how effective it is at pricing labor