Chapter 9 Cost Accounting

Which of the following equations measures the direct labor rate variance?

a. (SR × AH) − (SR × SH) b. (AR × SH) − (SR × AH) c. (AR × AH) − (SR × AH) d. none of these C

Which of the following equations measures a price variance?

a. AQ × (AP − SP) b. SP × (AQ − SQ) c. SQ × (AP − SP) d. (AQ − SQ) × (AP − SP) A

If variable manufacturing overhead is applied based on direct labor hours and there is an unfavorable direct labor efficiency variance

a. the direct materials usage variance will be unfavorable. b. the direct labor rate variance will be favorable. c. the variable manufacturing overhead efficiency variance will be unfavorable. d. the variable manufacturing overhead spending variance will be unfavorable. C

The unit standard cost is

a. the product of the standard price times the standard quantity for each unit. b. the price standard for each unit. c. the actual cost for a standard product. d. the amount of actual cost to produce a unit in a standardized process. A

The standard cost sheet includes all of the following EXCEPT

a. the standard quantity per unit. b. the standard material costs per unit. c. the standard cost per unit. d. the standard labor hours allowed for actual production. D

The standard overhead cost assigned to each unit of product manufactured is called the

a. total manufacturing cost. b. predetermined overhead cost. c. applied overhead cost. d. estimated overhead cost. C

A variable overhead efficiency variance could be caused by

a. using a poor quality material that needs more labor time to meet production standards. b. not taking a quantity discount. c. paying more than the standard rate for labor. d. price increases on the materials. A

Which of the following factors would cause an unfavorable labor rate variance?

a. using higher quality materials b. using low-efficiency workers c. using more unskilled workers d. using more highly skilled workers D

Which of the following factors would cause an unfavorable material quantity variance?

a. using poorly maintained machinery b. using higher quality materials c. using more highly skilled workers d. receiving discounts for purchasing larger than normal quantities A

The formula for the fixed overhead spending variance is:

a. Standard fixed overhead rate × Standard Hours b. AFOH − BFOH c. Applied fixed overhead − budgeted fixed overhead d. (AH − SH) × SVOR B

Which of the following is true of mix variance?

a. A mix variance is created whenever actual mix of inputs differs from standard mix. b. A mix variance is created whenever actual mix of inputs differs from standard output. c. A mix variance is the difference in standard and actual costs of the actual mix of inputs used. d. A mix variance is the difference between the actual amount of each input and its standard mix amount. A

Which of the following is true of currently attainable standards?

a. Currently attainable standards demand maximum sales price. b. Currently attainable standards can be achieved under efficient operating conditions. c. Currently attainable standards do not allow for normal breakdowns, interruptions, and less than perfect skill. d. Currently attainable standards demand maximum efficiency. B

The following condition which demands maximum efficiency and can be achieved only if everything operates perfectly is called:

a. Ideal standards b. Currently attainable standards c. Budget standards d. Personnel standards A

Which of the following is NOT true about Kaizen Standards?

a. Kaizen standards are the standards used for continuous improvement. b. Kaizen standards are a currently attainable standard that reflects planned improvement. c. Kaizen standards are constantly changing. d. Kaizen standards are the standards used in traditional costing systems. D

Which of the following is true about the variable overhead spending variance?

a. The variable overhead spending variance measures the aggregate effect of differences in the actual variable overhead rate and the standard variable overhead rate. b. The variable overhead spending variance measures the change in variable overhead consumption that occurs because of efficient (or inefficient) use of direct labor. c. The variable overhead spending variance is calculated by deducting actual direct labor hours used from standard direct labor hours that should have been used. d. The variable overhead spending variance is calculated by deducting actual variable overhead from standard variable overhead. A

Which of the following is the result of actual production being less than expected production?

a. There is an unfavorable spending variance. b. There is a favorable spending variance. c. There is an unfavorable volume variance. d. There is a favorable volume variance. C

Price standards are the responsibility of

a. accounting. b. purchasing. c. personnel. d. all of these. D

Price/rate variances focus on the differences between

a. actual and standard inputs multiplied by actual prices. b. actual and standard unit prices of an input multiplied by the actual quantity of inputs. c. actual and standard inputs multiplied by standard prices. d. actual and standard unit prices of an input multiplied by the budgeted quantity of inputs. B

The usage variances focus on the difference between

a. actual quantity used and standard quantity allowed for actual production. b. actual costs of inputs and standard costs of inputs. c. actual quantity used and standard quantity allowed for budgeted production. d. both a and b. A

Quantity price standards

a. are standard price multiplied by standard quantity. b. specify how much of the quantity of input should be used for the standard price. c. specify how much should be paid for the quantity of input to be used. d. specify how much of the quantity of input should be used for the actual price. C

Which is NOT an acceptable method of disposing of variances?

a. closing them to cost of goods sold b. closing them to raw materials, work-in-process, and finished goods c. closing them to work-in-process, finished goods, and cost of goods sold d. all are acceptable methods B

A five-percent wage increase for all factory employees would affect which of the following variances?

a. direct materials price variance b. direct labor rate variance c. direct labor efficiency variance d. variable manufacturing overhead efficiency variance B

Using more highly skilled direct laborers might affect which of the following variances?

a. direct materials usage variance b. direct labor efficiency variance c. variable manufacturing overhead efficiency variance d. all of these D

Standard costing

a. establishes price and quantity standards for inputs. b. provides journal entry support. c. is not used in unit costing. d. none of these. A

In setting price standards, the purchasing manager must consider

a. freight. b. quality. c. discounts. d. all of these. D

A materials price variance would NOT be caused by

a. ordering the wrong quality of materials. b. ordering from the wrong supplier. c. not taking a quantity discount. d. requiring laborers to work overtime. D

Which of the following people is most likely responsible for an unfavorable variable overhead efficiency variance?

a. production supervisor b. accountant c. personnel director d. supplier A

The standard plus the allowable deviation is called the:

a. standard quantity b. standard price c. upper control limit d. total budget variance C

Variances indicate

a. the cause of the variance. b. who is responsible for the variance. c. that actual performance is not going according to plan. d. when the variance should be investigated. C

Fixed overhead volume variance is:

a. the difference between actual fixed overhead and standard direct labor hours that should have been used. b. the difference between budgeted fixed overhead and actual direct labor hours used c. the difference between budgeted fixed overhead and applied fixed overhead. d. the difference between the actual fixed overhead and the budgeted fixed overhead. D

As a general rule, an investigation of a variance should be undertaken only if the

a. variance is isolated b. anticipated benefits are greater than the expected costs. c. variance is negative. d. variance is positive. B