Question 1

A yield variance occurs when the actual output is the same as the standard output.

Accepted Answer

A yield variance occurs when there is a difference between the actual output and the standard or expected output, not when they are the same.

Question 2

Developing standards for input prices and quantities allows for a more detailed understanding of flexible budget variances.

Accepted Answer

Developing standards for input prices and quantities allows for a more accurate comparison between actual and expected costs, and therefore a more detailed understanding of flexible budget variances.

Question 3

All variances accounts are closed out at the end of the year.

Accepted Answer

Variance accounts, which record the differences between actual and standard costs, are typically closed out at the end of the accounting period (year) to appropriate accounts to reflect these differences in the financial statements accurately.

Question 4

Standard costs are the amount that should be spent to produce a product or service.

Accepted Answer

Standard costs are predetermined costs that are expected to be incurred in producing a product or service, based on factors such as historical data, anticipated costs, and industry norms. These costs serve as a benchmark against which actual costs can be compared and variances can be analyzed.

Question 5

Standard costing is used in process industries because it's more difficult to utilize.

Accepted Answer

Standard costing can be effectively used in both process and job order costing industries. It simplifies the accounting process by assigning standard costs instead of actual costs to the goods produced, making it not inherently more difficult to utilize in process industries.

Question 6

The variable overhead efficiency variance measures the change in variable overhead consumption due to efficient or inefficient use of the activity driver used to assign overhead costs to products.

Accepted Answer

The statement accurately describes the variable overhead efficiency variance.

Question 7

In standard costing, overhead is applied to a product by debiting work in process and crediting variable and fixed overhead control accounts.

Accepted Answer

This is correct. Overhead is applied to a product in standard costing by debiting work in process and crediting variable and fixed overhead control accounts.

Question 8

A mix variance is created whenever the actual mix of inputs is equal to the standard mix.

Accepted Answer

A mix variance occurs when there is a difference between the actual mix of inputs used and the standard mix that was expected or budgeted, not when they are equal.

Question 9

The most detailed method to compute overhead variances is the four-variance method.

Accepted Answer

The four-variance method is the most detailed approach to compute overhead variances. It involves calculating four separate variances: a variable overhead efficiency variance, a variable overhead spending variance, a fixed overhead volume variance, and a fixed overhead spending variance.

Question 10

Both manufacturing and service firms may use standard costing systems.

Accepted Answer

Both manufacturing and service firms may use standard costing systems to determine the predetermined cost of products or services, and to compare actual costs with standard costs.

Question 11

The standard cost sheet shows costs needed to make many units of output.

Accepted Answer

A standard cost sheet typically shows the costs needed to make a single unit of output, not many units.

Question 12

the direct materials mix variance is the difference in the standard cost of actual inputs and the standard costs of inputs that should have been used.

Accepted Answer

This statement accurately describes the direct materials mix variance. It compares the actual quantities and costs of each type of material used in production to the expected quantities and costs based on the standard mix of materials established for the product. The difference between the actual and expected costs is known as the mix variance.

Question 13

Unfavorable variances occur whenever actual prices or usage are less than standard prices or usage, and the opposite for a favorable variance.

Accepted Answer

Unfavorable variances occur whenever actual prices or usage are more than standard prices or usage. The opposite is true for a favorable variance.

Question 14

The direct materials usage variance is the sum of the actual quantities and the standard quantities of units.

Accepted Answer

The direct materials usage variance is the difference between the actual quantities and the standard quantities of units, not the sum.

Question 15

The total budget variances are categorized into price variances and usage variances.

Accepted Answer

Price variances occur when the actual price paid for a material or service differs from the budgeted price, while usage variances occur when the actual quantity of materials or services used differs from the budgeted quantity. Together, these two types of variances make up the total budget variance.

Question 16

In computing efficiency variances, managers compute the standard quantity of materials used and the standard hours allowed.

Accepted Answer

This statement is true. In computing efficiency variances, managers compare the actual quantity of materials used and the actual hours worked against the standard quantity of materials used and the standard hours allowed, respectively.

Question 17

Price standards specify amounts and quantity standards specify prices.

Accepted Answer

Price standards specify prices per unit, while quantity standards specify the expected amount or quantity of output to be produced.

Question 18

The direct materials price variance is the difference between actual and standard pricing.

Accepted Answer

This statement is true. The direct materials price variance is calculated as follows: (actual price - standard price) x actual quantity purchased.

Question 19

The unit quantity standards can be used to compute the total amount of inputs allowed for the actual output.

Accepted Answer

Unit quantity standards specify the amount of inputs required to produce one unit of output. By multiplying the unit quantity standard by the actual output, the total amount of inputs allowed for the actual output can be calculated. Therefore, the statement is true.

Question 20

The three-variance method requires dividing costs into fixed and variable amounts.

Accepted Answer

The answer of The three-variance method requires dividing costs into...

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