BSAD 530 (Advanced Managerial Accounting) Exam 4
which statement regarding variable overhead variance analysis is true?
the variable overhead efficiency variance may depend on the efficiency of the direct labor.
The standard quantity allowed equals
Actual output x standard quantity
if the actual level of activity is greater than the planned level of activity, the activity variances will be:
unfavorable
the difference between the actual hours used and the standard hours allowed for the actual output is used in the calculation of the labor __ variance.
efficiency
the variable overhead __ variance measures activity differences and the variable overhead __ variance measures cost differences.
efficiency rate
An unfavorable labor efficiency variance can result from
faulty equipment, poorly motivated workers, insufficient product demand
when the standard cost allowed for the actual output is less than the standard cost allowed for the planned output the activity variance is labeled as:
favorable.
an unfavorable materials quantity variance:
occurs when the actual amount of material used is greater than the standard amount of material allowed for the actual output of the period.
a(n) __ standard specifies how much should be paid for an input.
price
__ standards specify how much input should be used to produce a produce or provide a service.
quantity
__ standards specify how much input should be used to produce a product or provide a service.
quantity
the difference between the amount of an input used and the amount that should have been used, all evaluated at the standard price for the input, is called a __ variance.
quantity
a benchmark used in measuring performance is called a(n) __.
standard
standard quantities and the cost of the inputs to make a single product are accumulated on a(n) __ __ card.
standard cost
a price variance is the difference between:
the actual price and the standard price multiplied by the actual amount of the input.
Advantages to using a standard cost system include
Standard costs can simplify bookkeeping and can provide benchmarks individuals use to judge their own performance
if manager consider it unwise to adjust the workforce in response to changes in the workload:
the direct labor workforce is really fixed in the short run.
managers consider it unwise to adjust the workforce in response to changes in workload:
the direct labor workforce is really fixed in the short run.
The materials price variance is calculated using the
Standard price of the input, actual quantity of the input purchased, and actual price of the input
material requirements plus and allowance for unavoidable waste are added together to determine the __ quantity of a material input per unit of output.
standard
the __ price per unit of an input should reflect the expected cost of the raw materials less an discounts taken.
standard
Direct material standards
- Are based on standard price and quantity, - should be based on input from production and purchasing managers
to calculate a quantity variance, multiply the __ quantity times the standard price and compare it to the standard quantity allowed times the __ price.
-actual -standard
which of the following are used in calculating the materials price variance?
-actual price of the input -actual quantity of the input purchased -standard price of the input
When using a standard cost system:
-an undue emphasis on labor efficiency variances can create pressure to build excess inventory -the information in the variance reports may be too old to be useful
Standards are:
-benchmarks for measuring performance -compared to the actual quantities and costs of inputs -set for each major production input
the direct material spending variance:
-can be broken down into the quantity variance and the price variance. -explains what was spent on materials and what should have been spent. -needs to be decomposed for analysis.
which of the following are used to calculate the standard quantity per unit of direct materials?
-direct materials requirements per unit of finished product. -allowance for rejects -allowance for waste and spoilage
which of the following are reasons that the materials price variance is calculated at the time the materials are purchased?
-it allows multiple to be carried in the inventory accounts at standard cost. -this practice simplifies bookkeeping. -management can generate more timely variance reports.
standard costs are a key element in the __ by __ approach utilized by some companies.
-management -exception
excessive inventory on hand, especially in the work in process inventory account, leads to:
-obsolete goods -increased defects -inefficient operations
unfavorable labor rate variances may occur as a result of:
-overtime premiums being charged to the direct labor account. -skilled workers being assigned to jobs requiring little skill.
which of the following statements are true?
-overtime premiums can cause an unfavorable labor rate variance -how production supervisors use direct labor workers can lead to labor rate variances.
an unfavorable labor efficiency variance can result from:
-poorly motivated workers -inaccurate standards -faulty equipment
the materials price variance is computed when materials are __ and the materials quantity variance is computed when materials are __.
-purchased -used
direct material standards:
-should be based on input from production and purchasing managers -are based on input from production and purchasing managers.
when setting direct labor standards:
-some companies use rates based on an expected mix of workers -time and motion studies may be used -the production manager should be consulted
when calculating the labor rate variance, multiply the actual hours worked times the __ labor rate and compare it to the actual hours worked times the __ labor rate.
-standard -actual
which of the following are advantages to using a standard cost system?
-standard costs can simplify bookkeeping. -standards can provide benchmarks that can be used by individuals to judge their own performance.
the standard direct labor-hours per unit of an output includes:
-the estimated time to complete the unit -an allowance for cleanup and downtime.
when using a standard cost system:
-the information in the variance reports may be too old to be useful. -an undue emphasis on labor efficiency variances can create pressure to build excess inventory.
which of the following statements are true?
-when standards are not met, the reasons why should be investigated. -standards prove information for measuring performance.
a price __ indicated how much should be paid for an input.
...
To calculate a price variance, multiply the _________ quantity times the actual price and compare it to the actual quantity times the _________ price
Actual / Standard
To calculate a quantity variance multiply the ________ quantity times the standard price and compare it to the standard quantity allowed times the ______ price
Actual / Standard
The amount of an input that should have been used to produce the actual output is known as the ______ quantity or hours allowed
Standard
When the actual quantity of materials used is less than the standard quantity allowed the material quantity variance is labeled as __________
Favorable
The materials price variance is generally calculated at the time materials are purchased because:
It simplifies bookkeeping, management can generate more timely variance reports, and it allows materials to be carried in the inventory accounts at standard cost
SR (AH-SH) is the formula for the __________ variance
Labor efficiency
The difference between the standard and the actual direct labor hourly rates is reflected in the ________ ________ variance
Labor rate
An allowance for rejects increases the standard quantity per unit of materials (T/F)
True
How production supervisors use direct labor workers can lead to labor rate variances (T/F)
True
Material quantity variances due to inferior materials are the responsibility of the purchasing department (T/F)
True
Overtime premiums can cause an unfavorable labor rate variance (T/F)
True
The production manager is most often responsible for the materials quantity variance (T/F)
True
which of the following statements is true?
a labor efficiency variance is a quantity variance.
the materials price variance is calculated using the __ quantity of the input purchased.
actual
the variable overhead efficiency variance compares the __ hours times the standard rate with the standard hours allowed for the actual output times the __ rate.
actual standard
to calculate a price variance, multiply the __ quantity times the actual price and compare it to the actual quantity times the __ price.
actual standard
the standard quantity allowed equals:
actual output x standard quantity
the materials price variance is the difference between the actual price of materials.
and the standard price for materials times the actual quantity of materials.
direct labor variances:
are computed in the same way as material variances.
standard costs may:
be used to compute both flexible budget activity and spending variances.
A quantity variance is
calculated using the standard price of the input
the standard quantity or hours and the standard price or rate required to produce a unit of a specific product is shown on a standard __ __.
cost card.
a quantity variance:
is calculated used the standard price of the input
SR(AH-SH) is the formula for the __ variance
labor efficiency
poor supervision is one possible cause of an unfavorable __ variance.
labor efficiency
the standard labor rate per hour:
may be a single rate for all employees in a department.
the standard price of the material is used in the calculation of the material quantity variance because:
using actual prices would hold the production manager responsible for the inefficiencies of the purchasing manager
the standard cost for __ manufacturing overhead is computed the same way as the standard cost for direct labor.
variable
The purchasing manager is generally responsible for the material ________ variance, and the production manager is generally responsible for the material _________ variance
Price / quantity
How much should be paid for an input is indicated by a(n) ______ _______
Price standard
The standard labor rate per hour
reflects the expected mix of workers
the amount of an input that should have been used to produce the actual output is known as the __ quantity or hours allowed.
standard
standard quantities and the cost of the inputs to make a single product are accumulated on a(n) __ __card.
standard cost
the most difficult standard to determine is probably the:
standard hours per unit.
The material quantity variance reflects the difference between the ___________ quantity of materials used in production and the _________ quantity allowed for the actual output
Actual/ Standard
the purchasing manager is generally responsible for the material __ variance, and the production manager is generally responsible for the material __ variance.
price quantity
the __ manager is usually responsible for controlling the labor efficiency variance.
production
the __ supervisor is generally responsible for controlling the labor rate variance.
production
the materials quantity variance is generally the responsibility of the __ department manager.
production
Most companies compute the material price variance when materials are __ and the material quantity variance when materials are __.
purchased used
the variable overhead rate variance uses the same basic formula as the labor rate variance except that the variable overhead rates are used instead of the direct labor rates.
TRUE
The standard hours per unit of an output includes
The estimated time to complete the unit , and an allowance for cleanup and downtime
which of the following statements is true?
the variable part of manufacturing overhead is analyzed using the same basic formulas used for materials and labor.
which of the following statements are true?
-standard costs offer several advantages and disadvantages -managers should not use standards to assign blame.
The variable overhead _______ variance measures activity differences and the variable overhead _______ variance measures cost differences
efficiency / rate
The difference between the actual price paid for the material and what should have been paid according to the standard is reflected in the direct materials ________ variance
price
The labor efficiency variance is generally the responsibility of the _______ manager
Production
The labor rate variance is typically the responsibility of the __________ supervisor
Production
The calculation of a standard price per unit of direct materials includes:
Purchase price of the materials, purchase discounts, shipping costs
The final delivered price that should be paid for each unit of direct materials is the ______ price per unit of materials
Standard
The MOST difficult standard to determine is PERHAPS the
Standard hours per unit
How much input should be used to produce a product or provide a service is a(n) _________ standard
Quantity
SP (AQ-SQ) is the formula for the materials __________ variance
Quantity
If the actual level of activity is greater than the planned level of activity the activity variances will be
Unfavorable
material requirements plus an allowance for unavoidable waste are added together to determine the __ quantity of a material input per unit of output.
standard
A price variance is the difference between the
actual price and the standard price multiplied by the actual amount of the input
when the standard purchase price is less than the actual price, the material price variance is __.
unfavorable
