Question 1

Which statement is true regarding a standard cost system?

Accepted Answer

A)  Both actual and standard costs are used.
B)  Only standard costs are used.
C)  If variances occur,then something negative in the operations has occurred.
D)  Standards are used only when actual amounts are not available.

Question 2

If the actual amount of direct materials used in production was less than the standard amount allowed for units produced,there was:

Accepted Answer

A)  A favorable materials price variance.
B)  A favorable total materials variance.
C)  A favorable materials quantity variance.
D)  An unfavorable materials quantity variance. C

Question 3

If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit,then the materials price variance is:

Accepted Answer

A)  $2,850 Favorable.
B)  $1,575 Unfavorable.
C)  $1,275 Favorable.
D)  $2,850 Unfavorable.

Question 4

The calculation of the labor efficiency variance is:

Accepted Answer

A)  Standard hourly rate multiplied by (standard hours minus actual hours) .
B)  Standard hours multiplied by (standard rate minus actual rate) .
C)  Actual labor hours multiplied by (standard rate minus actual rate) .
D)  Actual rate multiplied by (standard hours minus actual hours) .

Question 5

A standard cost is the per-unit cost incurred under:

Accepted Answer

A)  Ideal operating conditions.
B)  Perfect operating conditions.
C)  Normal,but efficient operating conditions.
D)  Minimally acceptable operating conditions.

Question 6

If actual direct labor cost was $7,560 and standard labor cost was $7,000,the journal entry to record this would include:

Accepted Answer

A)  A credit to the labor rate variance account of $560 and a credit to Direct Labor of $7,000.
B)  A debit to the labor rate variance account of $560 and a debit to Direct Labor of $7,000.
C)  A credit to the labor rate variance account of $560 and a debit to Direct Labor of $7,560.
D)  A debit to the labor rate variance account of $560 and a credit to Direct Labor of $7,560.

Question 7

Dawson Company has a union contract which calls for an 8% cost of living increase in the wages paid to all factory workers as of July 1 of the current year.This suggests that:

Accepted Answer

A)  The labor rate variance for July will be unfavorable.
B)  The labor rate variances during the first half of the current year have been favorable.
C)  The standard labor cost per unit should be revised as of July 1.
D)  The labor efficiency variance for July will be unfavorable.

Question 8

If the hourly wage rate actually paid during January is higher than the standard rate,the result is:

Accepted Answer

A)  An unfavorable labor rate variance.
B)  A favorable labor rate variance.
C)  An unfavorable labor efficiency variance.
D)  A favorable total labor variance.

Question 9

The overhead spending variance:

Accepted Answer

A)  Occurs automatically whenever actual production levels differ from the "normal" production level used to compute the standard overhead cost per unit.
B)  Is the difference between amounts spent for actual manufacturing overhead costs and the amount applied to production.
C)  Is computed as the difference between variable overhead per the flexible budget and actual variable overhead costs incurred.
D)  Is the portion of the total overhead variance that is considered "controllable" by the production manager.

Question 10

An unfavorable cost variance will be debited to a cost variance account.

Accepted Answer

A) True 
 B)False

Question 11

The total overhead variance is the difference between:

Accepted Answer

A)  Budgeted overhead and applied overhead.
B)  Actual overhead and budgeted overhead.
C)  Actual overhead and applied overhead.
D)  Applied overhead and budgeted overhead.

Question 12

When standard costs are used in a cost accounting system:

Accepted Answer

A)  A favorable cost variance results when standard amounts are less than actual costs.
B)  Cost variances are shown in the year-end balance sheet as assets,if favorable,or as liabilities,if unfavorable.
C)  Costs charged to the Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold accounts are actual costs.
D)  Costs charged to the Work in Process Inventory,Finished Goods Inventory,and Cost of Goods Sold accounts are at standard costs.

Question 13

Standard cost systems variance computations
Livingston Corporation recently implemented a standard cost system.The company's cost accountant has provided the following data to perform a variance analysis for May:  Compute the following variances.Indicate whether each variance is favorable (F)or unfavorable (U):
(a)Materials price variance: $__________
(b)Materials quantity variance: $__________
(c)Labor rate variance: $__________
(d)Labor efficiency variance: $__________
(e)Overhead spending variance: $__________
(f)Overhead volume variance: $__________

Accepted Answer

(a)$39,000 F (b)$31,...

Question 14

A favorable materials price variance indicates that actual prices paid in acquiring materials were more than standard prices.

Accepted Answer

A) True 
 B)False

Question 15

A materials quantity variance is the standard price times standard quantity,less actual quantity.

Accepted Answer

A) True 
 B)False

Question 16

Factory overhead variances are usually recorded when:

Accepted Answer

A)  Overhead is applied to Work in Process.
B)  Goods are finished and transferred to finished goods inventory.
C)  Goods are sold.
D)  Actual factory overhead costs are incurred. A

Question 17

Standard costs actually are ideal costs per unit.

Accepted Answer

A) True 
 B)False

Question 18

The calculation of the labor rate variance is:

Accepted Answer

A)  Standard rate multiplied by (standard hours minus actual hours) .
B)  Standard hours multiplied by (standard rate minus actual rate) .
C)  Actual labor hours multiplied by (standard rate minus actual rate) .
D)  Actual rate multiplied by (standard hours minus actual hours) .

Question 19

Standard cost systems are generally compatible with job cost systems or with process cost systems.

Accepted Answer

A) True 
 B)False  True

Question 20

Favorable standard cost variances are normally closed at the end of the period by:

Accepted Answer

A)  Crediting the variance account and debiting Cost of Goods Sold.
B)  Debiting the variance account and crediting Cost of Goods Sold.
C)  Debiting the variance account and crediting Work in Process.
D)  Crediting the variance account and debiting Work in Process.

Exam 24: Standard Cost Systems

Which statement is true regarding a standard cost system?

Correct Answer
verified

If the actual amount of direct materials used in production was less than the standard amount allowed for units produced,there was:

Correct Answer
verified
C

If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit,then the materials price variance is:

Correct Answer
verified

The calculation of the labor efficiency variance is:

Correct Answer
verified

A standard cost is the per-unit cost incurred under:

Correct Answer
verified

If actual direct labor cost was $7,560 and standard labor cost was $7,000,the journal entry to record this would include:

Correct Answer
verified

Dawson Company has a union contract which calls for an 8% cost of living increase in the wages paid to all factory workers as of July 1 of the current year.This suggests that:

Correct Answer
verified

If the hourly wage rate actually paid during January is higher than the standard rate,the result is:

Correct Answer
verified

The overhead spending variance:

Correct Answer
verified

An unfavorable cost variance will be debited to a cost variance account.

Correct Answer
verified

The total overhead variance is the difference between:

Correct Answer
verified

When standard costs are used in a cost accounting system:

Correct Answer
verified

Correct Answer
verified
(a)$39,000 F (b)$31,...
View Answer

A favorable materials price variance indicates that actual prices paid in acquiring materials were more than standard prices.

Correct Answer
verified

A materials quantity variance is the standard price times standard quantity,less actual quantity.

Correct Answer
verified

Factory overhead variances are usually recorded when:

Correct Answer
verified
A

Standard costs actually are ideal costs per unit.

Correct Answer
verified

The calculation of the labor rate variance is:

Correct Answer
verified

Standard cost systems are generally compatible with job cost systems or with process cost systems.

Correct Answer
verified
True

Favorable standard cost variances are normally closed at the end of the period by:

Correct Answer
verified

Exam 24: Standard Cost Systems

Which statement is true regarding a standard cost system?

Correct AnswerverifiedShow Answer

If the actual amount of direct materials used in production was less than the standard amount allowed for units produced,there was:

Correct AnswerverifiedC

If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit,then the materials price variance is:

Correct AnswerverifiedShow Answer

The calculation of the labor efficiency variance is:

Correct AnswerverifiedShow Answer

A standard cost is the per-unit cost incurred under:

Correct AnswerverifiedShow Answer

If actual direct labor cost was $7,560 and standard labor cost was $7,000,the journal entry to record this would include:

Correct AnswerverifiedShow Answer

Dawson Company has a union contract which calls for an 8% cost of living increase in the wages paid to all factory workers as of July 1 of the current year.This suggests that:

Correct AnswerverifiedShow Answer

If the hourly wage rate actually paid during January is higher than the standard rate,the result is:

Correct AnswerverifiedShow Answer

The overhead spending variance:

Correct AnswerverifiedShow Answer

An unfavorable cost variance will be debited to a cost variance account.

Correct AnswerverifiedShow Answer

The total overhead variance is the difference between:

Correct AnswerverifiedShow Answer

When standard costs are used in a cost accounting system:

Correct AnswerverifiedShow Answer

Correct Answerverified(a)$39,000 F (b)$31,...View AnswerShow Answer

A favorable materials price variance indicates that actual prices paid in acquiring materials were more than standard prices.

Correct AnswerverifiedShow Answer

A materials quantity variance is the standard price times standard quantity,less actual quantity.

Correct AnswerverifiedShow Answer

Factory overhead variances are usually recorded when:

Correct AnswerverifiedA

Standard costs actually are ideal costs per unit.

Correct AnswerverifiedShow Answer

The calculation of the labor rate variance is:

Correct AnswerverifiedShow Answer

Standard cost systems are generally compatible with job cost systems or with process cost systems.

Correct AnswerverifiedTrue

Favorable standard cost variances are normally closed at the end of the period by:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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C

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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(a)$39,000 F (b)$31,...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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A

Correct Answer
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Correct Answer
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Correct Answer
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True

Correct Answer
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