Deck 9: Standard Costing: a Functional-Based Control Approach

Question 1

In setting price standards, the purchasing manager must consider

A) freight.
B) quality.
C) discounts.
D) all of these.

Answer 1

D

Question 2

During August, 10,000 units were produced.The standard quantity of material allowed per unit was 10 pounds at a standard cost of $3 per pound.If there was an unfavorable usage variance of $18,750 for August, the actual quantity of materials used must be

A) 106,250 pounds.
B) 93,750 pounds.
C) 31,875 pounds.
D) 23,438 pounds.

Answer 2

A

Question 3

During September, 40,000 units were produced.The standard quantity of material allowed per unit was 5 pounds at a standard cost of $2.50 per pound.If there was a favorable usage variance of $25,000 for September, the actual quantity of materials used must have been

A) 210,000 pounds.
B) 190,000 pounds.
C) 105,000 pounds.
D) 95,000 pounds.

Answer 3

B

Question 4

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.

Question 5

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.

Question 6

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.

Question 7

During June, 12,000 pounds of materials were purchased at a cost of $8 per pound.If there was an unfavorable direct materials price variance of $6,000 for June, the standard cost per pound must be

A) $8.50.
B) $8.00.
C) $7.50.
D) $7.00.

Question 8

The standard cost sheet includes all of the following EXCEPT

A) the standard cost per unit.
B) the standard quantity allowed for actual production.
C) the standard price.
D) the standard quantity per unit.

Question 9

_______________ demand maximum efficiency and can be achieved only if everything operates perfectly.

A) Currently attainable standards
B) Ideal standards
C) Budget standards
D) Personnel standards

Question 10

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.

Question 11

Price standards are the responsibility of

A) accounting.
B) purchasing.
C) personnel.
D) all of these.

Question 12

All of the following are true of currently attainable standards EXCEPT

A) Currently attainable standards are based on an efficiently operating work force.
B) Currently attainable standards are based on ideal conditions.
C) Currently attainable standards allow for downtime and rest periods.
D) Currently attainable standards are based on present production processes and technology.

Question 13

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)

Question 14

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.

Question 15

Which of the following equations measures the total budget variance?

A) AQ ´ (AP - SP)
B) SP ´ (AQ - SQ)
C) SQ ´ (AP - SP)
D) (AQ ´ AP) - (SQ ´ SP)

Question 16

Mover Company has developed the following standards for one of its products: The company records materials price variances at the time of purchase.
The variable standard cost per unit is

A) $98.
B) $84.
C) $74.
D) $38.

Question 17

Figure 9-1 Bender Corporation produced 100 units of Product AA.The total standard and actual costs for materials and direct labor for the 100 units of Product AA are as follows:


-Refer to Figure 9-1.What is the material usage variance for Bender Corporation?

A) $60 (U)
B) $60 (F)
C) $33 (F)
D) $33 (U)

Question 18

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.

Question 19

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.

Question 20

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.

Question 21

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

Question 22

Figure 9-2 Bender Corporation produced 100 units of Product AA.The total standard and actual costs for materials and direct labor for the 100 units of Product AA are as follows:


-Refer to Figure 9-2.What is the journal entry to record labor variances?

A) Work in Process 6,072 Payroll 6,072
B) Payroll 6,072 Work in Process 6,072
C) Work in Process 6,000 Labor Efficiency Variance 552
Labor Rate Variance 480
Payroll 6,072
D) Work in Process 6,000 Labor Rate Variance 552
Labor Efficiency Variance 480
Payroll 6,072

Question 23

Roberts Company uses a standard costing system.The following information pertains to direct materials for the month of July: Roberts Company reports its material price variances at the time of purchase.

-
What is the journal entry to record material purchases?

A)
B)
C)
D)

Question 24

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.

Question 25

Figure 9-2 Bender Corporation produced 100 units of Product AA.The total standard and actual costs for materials and direct labor for the 100 units of Product AA are as follows:


- Refer to 9-2.What is the labor efficiency variance for Bender Corporation?

A) $480 (U)
B) $552 (F)
C) $552 (U)
D) $480 (F)

Question 26

Max Company has developed the following standards for one of its products. The company records materials price variances at the time of purchase.
The direct materials price variance is

A) $50,000 favorable.
B) $50,000 unfavorable.
C) $10,000 unfavorable.
D) $10,000 favorable.

Question 27

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

Question 28

The _______________ is the standard plus the allowable deviation.

A) upper control limit
B) standard price
C) standard quantity
D) total budget variance

Question 29

Claire Company uses a standard costing system.The following information pertains to direct labor costs for the month of February:

-How many actual labor hours were worked during February for Claire Company?

A) 10,000
B) 2,000
C) 1,200
D) 12,000

Question 30

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

Question 31

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

A) anticipated benefits are greater than zero.
B) anticipated benefits are greater than the expected costs.
C) variance is negative.
D) variance is positive.

Question 32

Roberts Company uses a standard costing system.The following information pertains to direct materials for the month of July: Roberts Company reports its material price variances at the time of purchase.

-
What is the material usage variance for Roberts Company?

A) $900 (F)
B) $1,950 (F)
C) $2,850 (F)
D) $900 (U)

Question 33

If the actual labor rate exceeds the standard labor rate and the actual labor hours exceed the number of hours allowed, the labor rate variance and labor efficiency variance will be

A) Favorable Favorable
B) Favorable Unfavorable
C) Unfavorable Favorable
D) Unfavorable Unfavorable

Question 34

During January, 7,000 direct labor hours were worked at a standard cost of $20 per hour.If the direct labor rate variance for January was $17,500 favorable, the actual cost per direct labor hour must be

A) $17.50.
B) $20.00.
C) $22.50.
D) $25.00.

Question 35

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

Question 36

Claire Company uses a standard costing system.The following information pertains to direct labor costs for the month of February:

-What is the total labor budget variance for Claire Company?

A) $18,000 (F)
B) $12,000 (F)
C) $18,000 (U)
D) $12,000 (U)

Question 37

Roberts Company uses a standard costing system.The following information pertains to direct materials for the month of July: Roberts Company reports its material price variances at the time of purchase.

-
What is the standard quantity of direct materials per unit for Roberts Company?

A) 3.50 lbs.
B) 3.25 lbs.
C) 3.10 lbs.
D) 3.00 lbs.

Question 38

During October, 10,000 direct labor hours were worked at a standard cost of $10 per hour.If the direct labor rate variance for October was $4,000 unfavorable, the actual cost per direct labor hour must be

A) $10.40.
B) $10.00.
C) $9.60.
D) $9.20.

Question 39

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

Question 40

Figure 9-1 Bender Corporation produced 100 units of Product AA.The total standard and actual costs for materials and direct labor for the 100 units of Product AA are as follows:


- Refer to Figure 9-1.What is the material price variance for Bender Corporation?

A) $27 (U)
B) $60 (F)
C) $33 (F)
D) $33 (U)

Question 41

Bread Company has developed the following standards for one of its products. The company records materials price variances at the time of purchase.

-
The variable manufacturing overhead efficiency variance is

A) $1,000 favorable.
B) $1,000 unfavorable.
C) $2,000 favorable.
D) $3,000 unfavorable.

Question 42

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.

Question 43

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

Question 44

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

Question 45

Bread Company has developed the following standards for one of its products. The company records materials price variances at the time of purchase.

-
The direct labor efficiency variance is

A) $8,000 favorable.
B) $8,000 unfavorable.
C) $20,000 unfavorable.
D) $20,000 favorable.

Question 46

If a company produces fewer units than expected, there will be

A) a favorable budget variance.
B) an unfavorable spending variance.
C) a favorable volume variance.
D) an unfavorable volume variance.

Question 47

Crawford Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000.The standard allows one direct labor hour per unit.During 2006, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor. What is Crawford's fixed overhead spending variance for 2011?

A) $60,000 (F)
B) $24,000 (F)
C) $36,000 (U)
D) $30,000 (U)

Question 48

Bread Company has developed the following standards for one of its products. The company records materials price variances at the time of purchase.

-
The direct labor rate variance is

A) $8,000 unfavorable.
B) $8,000 favorable.
C) $12,000 unfavorable.
D) $12,000 favorable.

Question 49

Harry Company's standard variable overhead rate is $6 per direct labor hour, and each unit requires 2 standard direct labor hours.During March, Harry recorded 6,000 actual direct labor hours, $37,000 actual variable overhead costs, and 2,900 units of product manufactured. What is the total variable overhead variance for March for Harry?

A) $1,200 (U)
B) $600 (U)
C) $1,000 (U)
D) $2,200 (U)

Question 50

Griffen Corporation uses a standard costing system.Information for the month of May is as follows: The factory overhead rate is based on a normal volume of 12,000 direct labor hours.Standard cost data at 12,000 direct labor hours were as follows:


- What is the variable overhead efficiency variance for Griffen?

A) $2,000 (U)
B) $8,000 (U)
C) $4,000 (U)
D) $20,000 (U)

Question 51

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.

Question 52

Crawford Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000.The standard allows 1 direct labor hour per unit.During 2006, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor.

- What is the standard activity level on which Crawford based its fixed overhead rate?

A) 110,000 direct labor hours
B) 105,000 direct labor hours
C) 100,000 direct labor hours
D) 50,000 direct labor hours

Question 53

Griffen Corporation uses a standard costing system.Information for the month of May is as follows: The factory overhead rate is based on a normal volume of 12,000 direct labor hours.Standard cost data at 12,000 direct labor hours were as follows:


-What is the fixed overhead spending variance for Griffen?

A) $2,000 (U)
B) $8,000 (U)
C) $4,000 (U)
D) $20,000 (U)

Question 54

Harry Company's standard variable overhead rate is $6 per direct labor hour, and each unit requires 2 standard direct labor hours.During March, Harry recorded 6,000 actual direct labor hours, $37,000 actual variable overhead costs, and 2,900 units of product manufactured. What is the variable overhead efficiency variance for March for Harry?

A) $2,200 (U)
B) $2,200 (F)
C) $600 (U)
D) $1,200 (U)

Question 55

If actual fixed manufacturing overhead was $54,000 and there was a $1,300 unfavorable spending variance and a $1,000 unfavorable volume variance, budgeted fixed manufacturing overhead must have been

A) $56,300.
B) $50,300.
C) $53,000.
D) $52,700.

Question 56

Total fixed overhead budget variance is always equal to

A) fixed overhead volume variance.
B) fixed overhead volume variance plus fixed overhead spending variance.
C) total variable overhead budget variance plus fixed overhead spending variance.
D) total variable overhead budget variance.

Question 57

Gina Production Company uses a standard costing system.The following information pertains to 2011. The factory overhead rate is based on an activity level of 10,000 units.Standard cost data for 5,000 units is as follows:
What is the variable overhead efficiency variance for Gina Production Company?

A) $562.50 (F)
B) $3,000.00 (U)
C) $562.50 (U)
D) $1,687.50 (F)

Question 58

An unfavorable variable overhead spending variance may be caused by

A) the use of excessive quantities of variable overhead items.
B) the payment of lower prices for variable overhead items used.
C) the use of excessive quantities of the variable overhead allocation base.
D) both a and b.

Question 59

Crawford Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000.The standard allows 1 direct labor hour per unit.During 2011, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor.

- What is Crawford's fixed overhead volume variance for 2006?

A) $60,000 (F)
B) $24,000 (F)
C) $36,000 (U)
D) $60,000 (U)

Question 60

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.

Question 61

Frekko Company collected the following information:

- Using the two variance method, what is the total variance?

A) $30,000 (U)
B) $30,000 (F)
C) $70,000 (F)
D) $70,000 (U)

Question 62

Figure 9-3 Reynolds Manufacturing Company has the following information pertaining to a normal monthly 10,000 units of:
Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit.
Standard factory overhead rates per direct labor hour are:


- Refer to Figure 9-3.What is the fixed overhead volume variance for Reynolds?

A) $6,000 (U)
B) $-0-
C) $4,000 (F)
D) $10,000 (F)

Question 63

Frekko Company collected the following information:

- Using the three variance method, what is the budget variance?

A) $6,000 (U)
B) $6,000 (F)
C) $24,000 (F)
D) $24,000 (U)

Question 64

Figure 9-4 Regis Corporation uses two materials in the production of its product.The materials, X and Y, have the following standards:
During April, the following actual production information was provided:


-
Refer to Figure 9-4.What is the materials mix variance?

A) $5,000 (F)
B) $10,000 (U)
C) $10,000 (F)
D) $15,000 (F)

Question 65

A mix variance is

A) created whenever the actual mix of inputs differs from the standard mix.
B) the difference in the standard cost of the actual mix of inputs used and the standard cost of the mix of inputs that should have been used.
C) both 'a' and 'b' are correct.
D) none of these are correct.

Question 66

Frekko Company collected the following information:

-Using the three variance method, what is the spending variance?

A) $36,000 (U)
B) $30,000 (U)
C) $36,000 (F)
D) $30,000 (F)

Question 67

Gina Production Company uses a standard costing system.The following information pertains to 2011: The factory overhead rate is based on an activity level of 10,000 units.Standard cost data for 5,000 units is as follows:
What is the fixed overhead volume variance for Gina Production Company?

A) $1,350 (F)
B) $3,600 (F)
C) $4,125 (U)
D) $1,350 (U)

Question 68

Figure 9-3 Reynolds Manufacturing Company has the following information pertaining to a normal monthly 10,000 units of:
Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit.
Standard factory overhead rates per direct labor hour are:


- Refer to Figure 9-3.What is the variable overhead spending variance for Reynolds?

A) $86,000 (U)
B) $0
C) $4,000 (F)
D) $10,000 (F)

Question 69

Frekko Company collected the following information:

- Using the two variance method, what is the budget variance?

A) $70,000 (U)
B) $30,000 (U)
C) $30,000 (F)
D) $70,000 (F)

Question 70

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

Question 71

How are standards developed? What is the difference between ideal and currently attainable standards?

Question 72

Figure 9-4 Regis Corporation uses two materials in the production of its product.The materials, X and Y, have the following standards:
During April, the following actual production information was provided:


-Refer to Figure 9-4.What is the materials usage variance?

A) $10,000 (U)
B) $ 8,000 (U)
C) $ 8,000 (F)
D) $18,000 (U)

Question 73

Figure 9-4 Regis Corporation uses two materials in the production of its product.The materials, X and Y, have the following standards:
During April, the following actual production information was provided:


- Refer to Figure 9-4.What is the labor yield variance?

A) $6,250 (F)
B) $4,000 (F)
C) $6,250 (U)
D) $4,000 (U)

Question 74

Figure 9-4 Regis Corporation uses two materials in the production of its product.The materials, X and Y, have the following standards:
During April, the following actual production information was provided:


-Refer to Figure 9-4.What is the labor efficiency variance?

A) $2,500 (F)
B) $6,250 (U)
C) $3,750 (F)
D) $3,750 (U)

Question 75

The following standard costs were developed for one of the John Miller Company's products:
STANDARD COST CARD PER UNIT
The following information is available regarding the company's operations for the period:
Budgeted fixed manufacturing overhead for the period is $2,400,000, and expected capacity for the period is 40,000 direct labor hours.
Required:

Question 76

Figure 9-3 Reynolds Manufacturing Company has the following information pertaining to a normal monthly 10,000 units of:
Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit.
Standard factory overhead rates per direct labor hour are:


-Refer to Figure 9-3.What is the fixed overhead spending variance for Reynolds?

A) $6,000 (U)
B) $-0-
C) $4,000 (F)
D) $10,000 (U)

Question 77

Frekko Company collected the following information:

-Using the two variance method, what is the volume variance?

A) $6,000 (F)
B) $40,000 (F)
C) $6,000 (U)
D) $40,000 (U)

Question 78

Fixed manufacturing overhead was budgeted at $200,000, and 25,000 direct labor hours were budgeted.If the fixed overhead volume variance was $8,000 favorable and the fixed overhead spending variance was $6,000 unfavorable, fixed manufacturing overhead applied must be

A) $208,000.
B) $206,000.
C) $202,000.
D) $194,000.

Question 79

Figure 9-4 Regis Corporation uses two materials in the production of its product.The materials, X and Y, have the following standards:
During April, the following actual production information was provided:


-Refer to Figure 9-4.What is the labor mix variance?

A) $2,500 (F)
B) $5,000 (U)
C) $5,000 (F)
D) $2,500 (U)

Question 80

Fixed manufacturing overhead was budgeted at $105,000, and 25,000 direct labor hours were budgeted.If the fixed overhead volume variance was $4,000 unfavorable and the fixed overhead spending variance was $1,500 favorable, fixed manufacturing overhead applied must be

A) $109,000.
B) $106,500.
C) $106,500.
D) $101,000.