Question 1

When benchmarking

Accepted Answer

Comparisons can highlight areas for improved cost management. Benchmarking is a process of comparing one's own performance against those of others or best practices and identifying the gaps in performance in order to improve it. By comparing the performance of similar organizations, one can identify areas of poor performance and adopt best practices from other successful organizations to improve business efficiency and effectiveness. Therefore, it is important to compare and analyze the data to identify areas of improvement in cost management.

Question 2

Benchmarking key activities can be even more important in not-for-profit/non-profit (NFP)organizations than it is for businesses seeking to make a profit.

Accepted Answer

In NFP organizations, benchmarking can help improve efficiency, effectiveness, and demonstrate accountability to stakeholders. It can also help in identifying best practices and areas where improvements can be made for achieving the desired outcomes. Therefore, benchmarking is crucial for NFP organizations to deliver the services they aim to provide.

Question 3

Which of the following statements about benchmarks is TRUE?

Accepted Answer

Benchmarks can be financial (e.g. comparing financial ratios) or nonfinancial (e.g. comparing employee satisfaction scores). Option B is not entirely true as benchmarks can be used to compute variances but that is not their only purpose. Option C is subjective as the relevance of a benchmark depends on the industry and context. Option D is false as obtaining benchmarks can have ethical and legal implications, such as confidentiality and potential antitrust concerns. Option E is also false as benchmarks are only one of several factors that drive strategic planning.

Question 4

Match the department that is most likely responsible for the listed variance. 
A)Purchasing department
B)Production department
C)Marketing department
D)Personnel department
-Direct material rate variance

Accepted Answer

The answer of Match the department that is most likely...

Question 5

Standards differ from budget amounts because standards change from onetime period to the next.

Accepted Answer

Standards are set benchmarks that remain consistent over time, while budgets can change from one period to the next based on various factors.

Question 6

The input standard cost per completed unit may be calculated by

Accepted Answer

The input standard cost per completed unit is the budgeted cost of input(s) required to produce one unit of output. This can be calculated by multiplying the budgeted price per input by the budgeted number of inputs required for one unit of output.

Question 7

When benchmarking, the best levels of performance are typically found in companies that are totally different.

Accepted Answer

The answer of When benchmarking, the best levels of performance...

Question 8

Compute the total standard cost per book for Publisher's Company using the following information: 1.Direct Materials: 1 ream of paper allowed per output unit manufactured, at $5.00 per ream.2.Direct Mfg.Labour: 0.35 labour-hours of input allowed per output unit finished, at $17.50 standard cost per hour.3.Variable Manufacturing Overhead: assigned on the basis of 0.25 per hour at $25 standard cost per hour per output unit finished.

Accepted Answer

Direct Materials cost = $5.00 per ream
One ream of paper allowed per output unit manufactured

Direct Manufacturing Labor cost = $17.50 per hour
0.35 labor hours of input allowed per output unit finished

Variable Manufacturing Overhead cost = $25.00 per hour
0.25 overhead hours of input allowed per output unit finished

Total Standard Cost per output unit = Direct Materials + Direct Manufacturing Labor + Variable Manufacturing Overhead

Total Standard Cost per output unit = ($5.00 x 1) + ($17.50 x 0.35) + ($25.00 x 0.25)

Total Standard Cost per output unit = $5.00 + $6.13 + $6.25

Total Standard Cost per output unit = $17.38

Therefore, the total standard cost per output unit is $17.38, so the answer is C.

Question 9

Match the department that is most likely responsible for the listed variance. 
A)Purchasing department
B)Production department
C)Marketing department
D)Personnel department
-Direct material efficiency variance

Accepted Answer

The answer of Match the department that is most likely...

Question 10

In a journal entry for a standard costing system that records favourable variances, to increase the relevant variance account

Accepted Answer

To record a favourable variance, the variance account must be credited. This increases the balance of the variance account, indicating that actual costs were less than expected which is desirable. Therefore, options A and B are incorrect. Option C is also incorrect as debiting the variance account would decrease the balance, indicating an unfavorable variance. Option E is irrelevant as there is no mention of a contra account in the scenario.

Question 11

Match the department that is most likely responsible for the listed variance. 
A)Purchasing department
B)Production department
C)Marketing department
D)Personnel department
-Direct labour efficiency variance

Accepted Answer

The answer of Match the department that is most likely...

Question 12

When a journal entry is made to record the direct materials used, a debit to the Direct Materials Efficiency Variance

Accepted Answer

A debit to the Direct Materials Efficiency Variance indicates that the actual usage of materials was greater than what was budgeted, which is an unfavorable variance.

Question 13

Which of the following is part of the benchmarking process?

Accepted Answer

The answer of Which of the following is part of...

Question 14

The process in which a company's products or services are measured relative to the best possible levels of performance is known as

Accepted Answer

Benchmarking is the process of comparing a company's products or services to those of competitors or industry best practices in order to identify opportunities for improvement and to set performance standards. The other options do not accurately describe this process.

Question 15

Match the department that is most likely responsible for the listed variance. 
A)Purchasing department
B)Production department
C)Marketing department
D)Personnel department
-Sales volume variance

Accepted Answer

Sales volume variance is the difference between what was expected to be sold according to the static budget and what the flexible budget would have expected, given the actual number of units sold. It highlights how changes in the volume of sales affect profits.

Question 16

When a journal entry is made in a standard cost system to record the liability for direct manufacturing labour costs, the difference between the debit to the work-in-process control account and the credit to the payroll payables is

Accepted Answer

In a standard cost system, the difference between the debit to the work-in-process control account and the credit to the payroll payables account represents the total of the price (rate) and efficiency labor variances.

Question 17

A standard is usually expressed on a per-unit basis and communicates an average amount indicating what should be achieved by any similar process each time period that performance measures are taken.

Accepted Answer

This is true. Standards are typically expressed as an average amount to be achieved over a period of time.

Question 18

Benchmarking is the continuous process of measuring products, services, and activities against the best possible levels of performance.

Accepted Answer

Benchmarking involves comparing performance against the best possible levels, allowing for continuous improvement.

Question 19

Match the department that is most likely responsible for the listed variance. 
A)Purchasing department
B)Production department
C)Marketing department
D)Personnel department
-Direct labour rate variance

Accepted Answer

The answer of Match the department that is most likely...

Question 20

Coffey Company maintains a very large direct materials inventory because of critical demands placed upon it for rush orders from large hospitals.Item A contains hard-to-get material Y.Currently, the standard cost of material Y is $2.00 per gram.During February, 22,000 grams were purchased for $2.10 per gram, while only 20,000 grams were used in production.There was no beginning inventory of material Y.Required:
a.Determine the direct materials rate variance, assuming that all materials costs are the responsibility of the materials purchasing manager so rate variances are based on purchase quantities.
b.Determine the direct materials rate variance, assuming that all materials costs are the responsibility of the production manager so rate variances are determined as quantities are placed into production.
c.Discuss the issues involved in determining the rate variance at the point of purchase versus the point of consumption.

Accepted Answer

The answer of Coffey Company maintains a very large direct...

Quiz 7: Flexible Budgets, Variances, and Management Control: I

When benchmarking

Benchmarking key activities can be even more important in not-for-profit/non-profit (NFP)organizations than it is for businesses seeking to make a profit.

Which of the following statements about benchmarks is TRUE?

Match the department that is most likely responsible for the listed variance. A)Purchasing department B)Production department C)Marketing department D)Personnel department -Direct material rate variance

Standards differ from budget amounts because standards change from onetime period to the next.

The input standard cost per completed unit may be calculated by

When benchmarking, the best levels of performance are typically found in companies that are totally different.

Match the department that is most likely responsible for the listed variance. A)Purchasing department B)Production department C)Marketing department D)Personnel department -Direct material efficiency variance

In a journal entry for a standard costing system that records favourable variances, to increase the relevant variance account

Match the department that is most likely responsible for the listed variance. A)Purchasing department B)Production department C)Marketing department D)Personnel department -Direct labour efficiency variance

When a journal entry is made to record the direct materials used, a debit to the Direct Materials Efficiency Variance

Which of the following is part of the benchmarking process?

The process in which a company's products or services are measured relative to the best possible levels of performance is known as

Match the department that is most likely responsible for the listed variance. A)Purchasing department B)Production department C)Marketing department D)Personnel department -Sales volume variance

When a journal entry is made in a standard cost system to record the liability for direct manufacturing labour costs, the difference between the debit to the work-in-process control account and the credit to the payroll payables is

A standard is usually expressed on a per-unit basis and communicates an average amount indicating what should be achieved by any similar process each time period that performance measures are taken.

Benchmarking is the continuous process of measuring products, services, and activities against the best possible levels of performance.

Match the department that is most likely responsible for the listed variance. A)Purchasing department B)Production department C)Marketing department D)Personnel department -Direct labour rate variance