Accy 309 - Ch 7

A company wishing to isolate variances at the point closest to the point of responsibility will determine its material price variance when a. material is purchased. b. material is issued to production. c. material is used in production. d. production is completed.

A

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

Select the correct statement from the following. a. An extremely favorable variance is not necessarily a good variance. b. There is a movement in practice toward reporting variances less often than in the past. c. Only unfavorable variances need to be investigated. d. For proper performance evaluation to be made, responsibility for variances should not be traced to specific managers.

A

The best basis upon which cost standards should be set to measure controllable production inefficiencies is: a. engineering standards based on attainable performance. b. normal capacity. c. engineering standards. d. ideal capacity.

A

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.

A

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.

A

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

Actual fixed overhead minus budgeted fixed overhead equals the a. fixed overhead volume variance b. fixed overhead spending variance. c. noncontrollable variance. d. controllable variance.

B

The total fixed overhead variance is the: a. measure of the lost profits from the lack of sales volume. b. amount of the underapplied or overapplied fixed overhead costs. c. potential cost reduction that can be achieved from better cost control. d. measure of production inefficiency.

B

A possible combination of materials or labor is called a. materials-time measurement. b. yield. c. mix. d. conversion.

C

An unfavorable direct labor efficiency variance could be caused by a (n): a. unfavorable variable overhead spending variance. b. unfavorable fixed overhead volume variance. c. unfavorable material usage variance. d. favorable fixed overhead volume variance.

C

At the end of a period, a significant material quantity variance should be allocated among:

WIP, FG, and COGS

An _______________ document specifies tasks to make a unit and the times allowed for each task

operations flow

A _______________ is best defined as the difference between total actual cost and total cost applied for actual output of period

total variance

A measure of the difference between the actual total quantity of input and the standard total quantity allowed based on output is called the a. mix variance. b. yield variance. c. volume variance. d. none of the above.

B

The purpose of ______ costing is to simplify costing procedures

standard

A bill of material does not include a. quantity of component inputs. b. price of component inputs. c. quality of component inputs. d. type of product output.

B

This month R Company planned to produce 3,000 units of its product. The standard cost card calls for six pounds of material at $.30 per pound. Actual production for the month was 3,100 units, resulting in a favorable price variance of $380 and an unfavorable quantity variance of $120. Based on these variances, one could conclude that: a. more materials were purchased than were used. b. the actual cost of material was less than the standard cost. c. the actual usage of material was less than the standard allowed. d. the actual cost and usage of material were both less than standard.

B

Variable overhead is applied on the basis of standard direct labor hours. If the direct labor efficiency variance is favorable, the variable overhead efficiency variance will be: a. unfavorable. b. favorable. c. zero. d. the same amount as the labor efficiency variance.

B

A large labor efficiency variance is prorated to which of the following at year-end? a. COGS: no, WIP Inventory: no, FG Inventory: no. b. COGS: no, WIP Inventory: yes, FG Inventory: yes. c. COGS: yes, WIP Inventory: no, FG Inventory: no. d. COGS: yes, WIP Inventory: yes, FG Inventory: yes.

D

Select the correct equation for the labor mix variance. a. (Actual mix x Actual hours x Actual rate) - (Actual mix x Actual hours x Standard rate) b. (Actual mix x Actual hours x Standard rate) - (Actual mix x Actual hours x Standard rate) c. (Actual mix x Actual hours x Standard rate) - (Standard mix x Actual hours x Standard rate) d. (Standard mix x Actual hours x Standard rate) - (Standard mix x Standard hours x Standard rate)

C

Standard cost systems should be used for all of the following reasons except: a. motivation. b. decision-making. c. establishing blame. d. clerical efficiency.

C

Total actual overhead minus total budgeted overhead at the actual input production level equals the a. variable overhead spending variance. b. total overhead efficiency variance. c. total overhead spending variance. d. total overhead volume variance.

C

A variable overhead spending variance is caused by a. using more or fewer actual hours than the standard hours allowed for the production achieved. b. paying a higher/lower average actual overhead price per unit of the activity base than the standard price allowed per unit of the activity base. c. larger/smaller waste and shrinkage associated with the resources involved than expected. d. both b and c are causes.

D

Select the correct statement regarding standards. a. A standard is a benchmark or norm used for planning and control. b. The difference between standard cost and actual cost is referred to as a variance. c. Standards are developed for materials, labor, and overhead. d. All of the above

D

Standard costs may be used for a. product costing. b. planning. c. controlling. d. all of the above.

D

The document that summarizes the expected quantities and costs needed to produce a unit is called a a. bill of materials. b. total cost of ownership document. c. operations flow document. d. standard cost card.

D

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

Variance analysis for conversion cost in automated plants normally focuses on: a. spending variances for overhead costs. b. efficiency variances for machinery and production costs rather than labor costs. c. volume variance for production. d. all of the above.

D