ACCT 331 Chapter 7 and Chapter 9

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

direct material, direct labor, and overhead

CVP analysis requires costs to be categorized as a. etiher fixed or variable b. direct or indirect c. product or period d. standard or actual

either fixed or variable

A total variance is best defined as the difference between total a. actual costs and total cost applied for the standard output of the period b. standard cost and total cost applied to production c. actual cost and total standard cost of the actual input of the period d. actual cost and total cost applied for the actual output of the period.

actual cost and total cost applied for the actual output of the period

the term "standard hours allowed" measures a. budgeted output at actual hours b. budgeted output at standard hours c. actual output at standard hours d. actual output at actual hours

actual output at standard hours

Which of the following factors is involved in studying cost-volume-profit relationships? a. product mix b. variable costs c. fixed costs d. all of the above

all of the above

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

all of the above

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

to provide a distinct measure of cost control

Given the following notation, what is the break-even sales level in units? SP = selling price per unit FC = total fixed cost VC = variable cost per unit a. SP/(FC/VC) b. FC/(VC/SP) c. VC/(SP-FC) d. FC/(SP-VC)

FC/(SP-VC)

To compute the break-even point in units, which of the following formulas is used? a. FC/CM per unit b. FC/CM ratio c. CM/CM ration d. (FC+VC)/CM ratio

FC/CM per unit

A firm's break-even point in dollars can be found in one calculation using which of the following formulas? a. FC/CM per unit b. VC/CM c. FC/CM ratio d. VC/CM ratio

FC/CM ratio

At the break-even point, fixed costs are always a. less than the contribution margin b. equal to the contribution margin c. more than the contribution margin d. more than the variable cost

equal to the contribution margin

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.

favorable variances are not necessarily good variances

Cost-volume-profit analysis is a technique available to management to understand better the interrelationships of several factors that affect a firm's profit. As with many such techniques, the account oversimplifies the real world by making assumptions. Which of the following is not a major assumption underlying CVP analysis? a. All costs incurred by a firm can be separated into their fixed and variable components b. the product selling price per unit is constant at all volume levels c. operating efficiency and employee productivity are constant at all volume levels d. for multi-product situations, the sales mix can vary at all volume levels

for multi-product situations, the sales mix can vary at all volume levels

In a multiple-product firm, the product that has the highest contribution margin per unit will a. generate more profit for each $1 of sales than the other products b. have the highest contribution margin ratio c. generate the most profit for the each unit sold d. have the lowest variable costs per unit

generate the most profit for each unit sold

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

material is purchased

The sum of the material price variance (calculated at point of purchase) and material quantity variance equals a. the total cost variance b. the material mix variance c. the material yield variance d. no meaningful number

no meaningful number

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

price of component inputs

With respect to fixed costs, CVP analysis assumes total fixed costs a. per unit remain constant as volume changes b. remain constant from one period to the next c. vary directly with volume d. remain constant across changes in volume

remain constant across changes in volume

If a firm's net income does not change as its volume changes, the firm('s) a. must be in the service industry b. must have no fixed costs c. sales price must equal $0 d. sales price must equal its variable costs

sales price must equal its variable costs

A purpose of standard costing is to a. replace budgets and budgeting b. simplify costing procedures c. eliminate the need for actual costing for external reporting purposes d. eliminate the need to account for year-end underapplied or overapplied manufacturing overhead

simjplify costing procedures

Break-even analysis assumes over the relevant range that a. total variable costs are linear b. fixed costs per unit are constant c. total variable costs are nonlinear d. total revenue is nonlinear

total variable costs are linear

After the level of volume exceeds the break-even point a. a contribution margin ratio increases b. the total contribution margin exceeds the total fixed costs c. total fixed costs per unit will remain constant d. the total contribution margin will turn from negative to positive

the total contribution margin exceeds the total fixed costs

The method of cost accounting that lends itself to break-even analysis is a. variable b. standard c. absolute d. absorption

variable

CVP analysis is based on concepts from a. standard costing b. variable costing c. job order costing d. process costing

variable costing

Consider the equation X = Sales - [(CM/Sales) x (Sales)]. What is X? a. net income b. fixed costs c. contribution margin d. variable costs

variable costs

The contribution margin ratio always increases when the a. variable costs as a percentage of net sales increase b. variable costs as a percentage of net sales decrease c. break-even point increases d. break-even point decreases

variable costs as a percentage of net sales decrease

Which of the following factors should NOT be considered when deciding whether to investigate a variance? a. magnitude of the variance b. trend of the variances over time c. likelihood that an investigation will reduce or eliminate future occurrences of the variance d. whether the variance is favorable or unfavorable

whether the variance is favorable or unfavorable

Which of the following will decrease the break-even point? Decrease in fixed cost - Increase in direct labor cost - Increase in selling price a. yes, yes, yes b. yes, no, yes c. yes, no, no d. no, yes, no

yes, no, yes

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

yes, yes, yes

At the end of a period, a significant material quantity variance should be a. closed to cost of goods sold b. allocated among raw material, work in process, finished goods, and cost of goods sold c. allocated among work in process, finished goods, and cost of goods sold d. carried forward as a balance sheet account to the next period

allocated among raw material, work in process, finished goods, and cost of goods sold

Standard costs a. are estimates of costs attainable only under the most ideal conditions b. are difficult to use with a process costing system c. can, if properly used, help motivate employees d. require that significant unfavorable variances be investigated, but do not require that significant favorable variances be investigated

can, if properly used, help motivate employees

In CVP analysis, linear functions are assumed for a. contribution margin per unit b. fixed cost per unit c. total costs per unit d. all of the above

contribution margin per unit

CVP analysis relies on the assumptions that costs are either strictly fixed or strictly variable. Consistent with these assumptions, as volume decreases total a. fixed costs decrease b. variable costs remain constant c. costs decrease d. costs remain constant

costs decrease

A standard cost system may be used in a. job order costing, but not process costing b. process costing, but not job order costing c. either job order costing or process costing d. neither job order costing nor process costing

either job order costing or process costing

When computing variances from standard costs, the difference between actual and standard price multiplied by actual quantity used yields a a. combined price-quantity variance b. price variance c. quantity variance d. mix variance

price variance

An operations flow document a. tracks the cost and quantity of material through an operation b. tracks the network of control points from receipt of a customer's order through the delivery of the finished product c. specifies tasks to make a unit and the time allowed for each task d. charts the shortest path by which to arrange machines for completing products

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

In a standard cost system, Work in Process Inventory is ordinarily debited with a. actual costs of material and labor and a predetermined overhead cost for overhead. b. standard costs based on the level of input activity (such as direct labor hours worked). c. standard costs based on production output d. actual costs of material, labor, and overhead

standard costs based on production output

The material price variance (computed at point of purchase) is a. the difference between the actual cost of material purchased and the standard cost of material purchased b. the difference between the actual cost of material purchased and the standard cost of material used. c. primarily the responsibility of the production manager d. both a and c

the differences between the actual cost of material purchased and the standard cost of material purchased

A company would most likely have an unfavorable labor rate variance and a favorable labor efficiency variance is 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

the mix of workers used in the production process was more experienced than the normal mix.

Cost-volume-profit relationships that are curvilinear may be analyzed linearly by considering only a. fixed and mixed costs b. relevant fixed costs c. relevant variable costs d. a relevant range of volume

a relevant range of volume