Managerial accounting Chapter 10 quiz 2

Standard hours allowed are computed using the equation a. unit labor standard × actual output. b. unit labor standard × standard output. c. unit labor standard × actual input. d. unit labor standard × standard input. e. not shown here.

A

Which of the following is true regarding variances? a. Unfavorable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage. b. Favorable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage. c. Unfavorable variances are always credits. d. Favorable variances are always debits. e. None of these.

A

The quantity of each input that should be used to produce one unit of output is documented on the standard cost sheet. (t or f)

T

Which of the following is not true concerning control limits? a. Variances that fall outside the control limits are investigated. b. The upper control limit is the standard plus the allowable deviation. c. Control limits are the top and bottom measures of the allowable range. d. The lower control limit is the standard minus the allowable deviation. e. In current practice, control limits are set objectively using standard formulas.

e

The total budget variance is the difference between the actual cost of the input and its planned cost. (t or f)

True

An unfavorable price variance occurs whenever the actual prices are greater than the standard prices. (t or f)

true

The standard unit cost is developed before the standard costs for direct materials, direct labor, and overhead can be set. (t or f)

False

The actual quantity of input at the actual price less the actual quantity of input at the standard price is the price variance. (t or f)

True

The standard cost sheet provides the input standards needed to compute the total amount of inputs allowed for the actual output, an essential component in computing efficiency variances. (t or f)

True

An acceptable range is established in order to determine if whether variances are significant. The acceptable range is the standard, plus or minus an allowable deviation. ( t or f)

`True

The production data needed to calculate the standard unit cost as well as the underlying details for the standard cost per unit are provided in a. the standard cost sheet. b. the standard production budget. c. the balance sheet. d. the standard work-in-process account. e. None of these.

a

All of the following are true regarding variance investigation except a. it is difficult to assess the costs and benefits of variance analysis on a case-by-case basis. b. every variance is investigated. c. variances are not investigated unless they are large enough to be of a concern. d. managers must consider whether a variance will recur. e. the investigation should be undertaken only if the anticipated benefits are greater than the expected costs.

b

The standard quantity of materials allowed is computed by the equation a. unit quantity standard × standard output. b. unit quantity standard × actual input. c. unit quantity standard × standard input. d. unit quantity standard × actual output.

d

The standard quantity of materials allowed can be calculated by multiplying the unit labor standard by the actual output. (t or f)

false