Question 1

Which one of the following is the difference between the actual and standard hourly wage rate multiplied by the actual direct labor hours worked during a period?
A)Total direct labor standard cost variance.
B)Direct labor efficiency variance.
C)Direct labor usage variance.
D)Direct labor flexible-budget variance.
E)Direct labor rate variance.

Accepted Answer

The direct labor rate variance is calculated as the difference between the actual hourly wage rate and the standard hourly wage rate, multiplied by the actual direct labor hours worked.

Question 2

A standard that sets the performance criterion at a level that workers with proper training and experience can attain most of the time without extraordinary effort is a(n):
A)Currently attainable standard.
B)Practical standard.
C)Efficiency standard.
D)Ideal standard.

Accepted Answer

Currently attainable standards are set at levels that workers with proper training and experience can achieve most of the time without requiring extraordinary effort.

Question 3

Using continuous-improvement standards likely has the effect(s)of all the following except:
A)Reductions in inefficiencies.
B)Reduced product defects.
C)Constantly decreasing standard levels.
D)Improved productivity.
E)Increasing pressure on employees and managers.

Accepted Answer

Continuous-improvement standards are focused on gradually increasing efficiency, productivity, and quality. It is not intended to decrease standard levels constantly. This would defeat the purpose of continuous improvement, which seeks to constantly improve upon existing standards, not lower them. Therefore, option C is incorrect. Options A, B, D, and E are all positive effects of using continuous-improvement standards.

Question 4

The difference between the actual sales volume for a period and the flexible-budget sales volume is:
A)The total sales-volume variance for the period.
B)The total production-volume variance for the period.
C)The sales price variance for the period.
D)The operating-income sales volume variance for the period.
E)A flexible-budget variance.

Accepted Answer

The answer of The difference between the actual sales volume...

Question 5

Which one of the following is the difference between the actual and standard direct labor hours for the units manufactured,multiplied by the standard hourly wage rate per hour?
A)Direct labor price variance.
B)Direct labor efficiency variance.
C)Total direct labor standard cost variance.
D)Direct labor flexible-budget variance.
E)Direct labor operating-income variance.

Accepted Answer

The difference between actual and standard direct labor hours is called direct labor efficiency variance, which captures the effect of using more or fewer hours than expected to produce a specific output. Multiplying this variance by the standard hourly wage rate gives the total direct labor efficiency variance. The other choices do not match this definition.

Question 6

The difference between the actual operating income of the period and master budgeted operating income for the period is the:
A)Total flexible-budget variance.
B)Sales-volume variance.
C)Sales price variance.
D)Operating income flexible-budget variance.
E)Total operating income variance.

Accepted Answer

The answer of The difference between the actual operating income...

Question 7

The primary purpose of calculating standard cost variances each period is:
A)To achieve financial control regarding operating activities.
B)To facilitate the recording of manufacturing costs during a period.
C)To adjust reported income to flexible-budget income.
D)To diagnose the problems of operating problems as well as what should be done to correct such problems.

Accepted Answer

The primary purpose of calculating standard cost variances each period is to achieve financial control regarding operating activities. Standard cost variances help the management in monitoring and controlling the manufacturing costs, which ultimately leads to better financial control over the company's operating activities.

Question 8

Which one of the following,for each direct material used in production,is the difference between the actual units of material used and the total standard units of the direct material that should have been used for the units of the product manufactured during the period,multiplied by the standard unit price of the direct materials?
A)Direct materials sales-volume variance.
B)Direct materials rate variance.
C)Direct materials usage variance.
D)Direct materials flexible-budget variance.
E)Direct materials mix variance.

Accepted Answer

The direct materials usage variance measures the difference between the actual units of material used and the standard units of material that should have been used, multiplied by the standard unit price. This variance is used to assess whether the company used more or less material than expected during production.

Question 9

Which one of the following is the difference in direct material costs between the actual amount incurred and the total standard cost in the flexible budget for the units manufactured during the period?
A)Direct materials price variance.
B)Direct materials mix variance.
C)Direct materials usage variance.
D)Direct materials flexible-budget variance.
E)Direct materials efficiency variance.

Accepted Answer

Direct materials flexible-budget variance represents the difference in direct material costs between the actual amount incurred and the total standard cost in the flexible budget for the units manufactured during the period. This variance encompasses any other direct materials variance, including price, mix, and usage variances. Therefore, D is the best choice.

Question 10

A total variable cost variance (such as for direct materials)can be broken down into separate variances that evaluate:
A)Price and efficiency.
B)Units and cost.
C)Volume and productivity.
D)Sales volume versus sales mix.
E)Efforts and results.

Accepted Answer

A total variable cost variance (such as for direct materials) can be broken down into two separate variances - price variance and efficiency variance. The price variance reflects the difference between the actual price paid for materials and the standard price that should have been paid. The efficiency variance reflects the difference between the actual quantity of materials used and the standard quantity that should have been used. Therefore, option A is the correct answer.

Question 11

The difference between the flexible-budget operating income and the actual operating income in a period is the:
A)Sales-mix variance.
B)Sales-volume variance.
C)Sales price variance.
D)Operating income flexible-budget variance.
E)Total operating income variance.

Accepted Answer

The difference between the flexible-budget operating income and the actual operating income is the operating income flexible-budget variance. This variance measures the difference between what the operating income should have been based on the flexible budget and what it actually was based on actual results. This variance can be broken down further into sales-volume variance, sales-price variance and expense variance components.

Question 12

For a direct material,which one of the following is the difference between the actual and standard unit price of the direct material multiplied by the actual quantity of the material purchased?
A)Direct materials price variance.
B)Direct materials volume variance.
C)Direct materials usage variance.
D)Direct materials flexible-budget variance.
E)Direct materials mix variance.

Accepted Answer

The difference between the actual and standard unit price of the direct material multiplied by the actual quantity of the material purchased is known as direct materials price variance. This variance measures the difference in cost incurred for the actual materials purchased compared to the standard cost allowed for those materials. It is used to evaluate the effectiveness of the purchasing function by indicating whether the purchasing department is paying the appropriate price for the materials.

Question 13

Which of the following benefits is not typically associated with a move to a just-in-time (JIT)manufacturing system?
A)Raw materials are delivered as close as possible to time of production.
B)Existence of long-term contracts with selected suppliers.
C)Reduction in employee training and education costs.
D)Decreases in manufacturing lead time.
E)Improved customer-response time (CRT).

Accepted Answer

JIT manufacturing systems often require increased employee training and education to ensure that workers are able to respond quickly and effectively to changes in production needs. Therefore, reduction in employee training and education costs is not typically associated with a move to a JIT manufacturing system.

Question 14

The way managers and employees who are affected by a standard cost system perceive the system will:
A)Be of little consequence on the success of the system if correctly implemented.
B)Generally be minimal in impact on the implementation of the system.
C)Affect its success or failure in implementing the system.
D)Be difficult to assess.
E)Not matter in the long run.

Accepted Answer

The perception of the standard cost system by managers and employees who are affected by it can have a significant impact on the success or failure in implementing the system. If they perceive the system as unfair or unrealistic, they may not fully support it, or even try to subvert it, which could cause the system to fail or produce inaccurate results. Therefore, it is crucial to address any perceived issues and communicate the benefits of the system to ensure the cooperation and buy-in of all stakeholders.

Question 15

The flexible-budget variable cost variance includes all of the following except:
A)Direct materials variances.
B)Sales price variance.
C)Variable selling and administrative expenses variances.
D)Direct labor variances.
E)Variable overhead variances.

Accepted Answer

The flexible-budget variable cost variance includes direct materials variances, variable selling and administrative expenses variances, direct labor variances, and variable overhead variances. However, the sales price variance is not included in the flexible-budget variable cost variance as it is a revenue variance, not a cost variance.

Question 16

The total variable cost flexible-budget variance for any given period:
A)Is the difference between actual total variable cost incurred and master budgeted total variable cost.
B)Is decomposable into sales-volume and sales-mix components.
C)Is decomposable into production-volume and production-mix components.
D)Can be broken down into flexible-budget variances for major costs such as materials,labor,variable overhead,and variable selling expenses.

Accepted Answer

The total variable cost flexible-budget variance can be broken down into variances for major costs like materials, labor, variable overhead, and variable selling expenses, reflecting differences between actual and budgeted costs for these components.

Question 17

The difference between the total actual sales revenue of a period and the total flexible-budget sales revenue for the units sold during the period is the:
A)Total flexible-budget variance.
B)Sales volume variance.
C)Selling price variance.
D)Operating income flexible-budget variance.
E)Operating income variance.

Accepted Answer

The difference between the total actual sales revenue and the total flexible-budget sales revenue for the units sold during the period is known as the selling price variance. This variance measures the effect of the actual selling price being different from the budgeted selling price on the total sales revenue.

Question 18

A standard cost system should be designed to generate and report variances:
A)Coincidental with regular reporting intervals.
B)As soon as possible.
C)Only when significant in amount.
D)Only when negative in impact.
E)Only when requested by decision-makers.

Accepted Answer

Variances should be reported as soon as possible to allow for prompt investigation and corrective action. Delayed reporting may result in lost opportunities to improve operations and profitability.

Question 19

For control purposes,it is usually preferable to calculate the materials price variance:
A)At point of purchase.
B)At point of production.
C)At the end of the period.
D)Only if the materials quantity variance is significant in amount.
E)Only if it is controllable by operating managers.

Accepted Answer

Calculating the materials price variance at the point of purchase allows for immediate action to be taken if there are any discrepancies between the actual price paid and the expected price. This helps control costs and prevents large variances from accumulating over time.

Option B is not the best choice as the materials price variance cannot be accurately determined until the materials are purchased.

Option C is not the best choice as it may be too late to take corrective action at the end of the period.

Option D is not relevant as the significance of the materials quantity variance does not impact the calculation of the materials price variance.

Option E is not relevant as the controllability of the variance does not impact the calculation of the materials price variance.

Question 20

A standard that assumes perfect implementation and maximum efficiency is called a(n):
A)Currently attainable standard.
B)Practical standard.
C)Efficiency standard.
D)Normal standard.
E)Ideal standard.

Accepted Answer

An ideal standard assumes perfect implementation and maximum efficiency, without any allowances for inefficiencies or limitations, making it an ideal or perfect goal to strive for.

Quiz 14: Operational Performance Measurement: Sales and Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Which one of the following is the difference between the actual and standard hourly wage rate multiplied by the actual direct labor hours worked during a period?

A standard that sets the performance criterion at a level that workers with proper training and experience can attain most of the time without extraordinary effort is a(n) :

Using continuous-improvement standards likely has the effect(s) of all the following except:

The difference between the actual sales volume for a period and the flexible-budget sales volume is:

Which one of the following is the difference between the actual and standard direct labor hours for the units manufactured,multiplied by the standard hourly wage rate per hour?

The difference between the actual operating income of the period and master budgeted operating income for the period is the:

The primary purpose of calculating standard cost variances each period is:

Which one of the following is the difference in direct material costs between the actual amount incurred and the total standard cost in the flexible budget for the units manufactured during the period?

A total variable cost variance (such as for direct materials) can be broken down into separate variances that evaluate:

The difference between the flexible-budget operating income and the actual operating income in a period is the:

For a direct material,which one of the following is the difference between the actual and standard unit price of the direct material multiplied by the actual quantity of the material purchased?

Which of the following benefits is not typically associated with a move to a just-in-time (JIT) manufacturing system?

The way managers and employees who are affected by a standard cost system perceive the system will:

The flexible-budget variable cost variance includes all of the following except:

The total variable cost flexible-budget variance for any given period:

The difference between the total actual sales revenue of a period and the total flexible-budget sales revenue for the units sold during the period is the:

A standard cost system should be designed to generate and report variances:

For control purposes,it is usually preferable to calculate the materials price variance:

A standard that assumes perfect implementation and maximum efficiency is called a(n) :