Lesson 3 Standard Cost Accounting_EXAMINATION NUMBER: 06164900

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EXAMINATION NUMBER: 06164900

Questions 1-20: Select the one best answer to each question.

1. A company uses a two-variance analysis for overhead variances—controllable variances and volume variances.

The volume variance is based on the

A. total overhead application rate.

B. total expenses at various activity levels.

C. variable overhead application rate.

D. fixed overhead application rate.

2. When using a flexible budget, what will occur to fixed costs (on a per unit basis) as production increases?

A. Fixed costs aren’t considered in flexible budgeting.

B. Fixed costs per unit will decrease.

C. Fixed costs per unit will remain unchanged.

D. Fixed costs per unit will increase.

3. The Johns Company budgeted overhead at $117,500 for the period for Department A based on a budgeted volume of 50,000 direct labor hours. At the end of the period, the factory overhead control account for Department A had a balance of $124,000. The actual (and allowed) direct labor hours were 52,000. What was the overapplied (underapplied) overhead for the period?

A. $(1,800) C. $1,800

B. $(6,500) D. $6,500

4. Which of the following terms bestdescribes a characteristic of a system of standard costs?

A. Marginal costing C. Management by exception

B. Contribution approach D. Standardized accounting

5. What standard cost variance represents the difference between actual factory overhead incurred and budgeted factory overhead based on actual hours worked?

A. Volume variance C. Efficiency variance

B. Spending (budget) variance D. Quantity variance

6. When standard costs are used in a process cost accounting system, how are equivalent units involved or used in the cost report at standard?

A. Equivalent units aren’t used.

B. Equivalent units are computed using a special approach.

C. The standard equivalent units are multiplied by the actual cost per unit.

D. The actual equivalent units are multiplied by the standard cost per unit.

7. Information on Armor Company’s overhead costs is as follows:

Actual variable overhead $95,000

Actual fixed overhead $28,000

Standard hours allowed for actual production 30,000

Standard variable overhead rate per direct labor hour $3.25

Standard fixed overhead rate per direct labor hour $0.75

What is Armor Company’s total overhead variance?

A. $2,500 favorable C. $3,000 favorable

B. $2,500 unfavorable D. $3,000 unfavorable

8. The direct labor costs for Boundary Company are as follows:

Standard direct labor hours 35,000

Actual direct labor hours 33,500

Direct labor efficiency variance—favorable $12,000

Direct labor rate variance—favorable $3,075

Total payroll $252,925

What is the company’s standard direct labor rate?

A. $2.63 C. $8.00

B. $3.87 D. $10.50

9. A flexible budget is appropriate for a

Marketing Budget Service Industry

A. No No

B. No Yes

C. Yes No

D. Yes Yes

10. How should an efficiency variance that is material in amountbe treated at the end of an accounting period?

A. Reported as a deferred charge or credit

B. Allocated among work in process inventory, finished goods inventory, and cost of goods sold

C. Charged or credited to cost of goods manufactured

D. Allocated among cost of goods manufactured, finished goods inventory, and cost of goods sold

11. Winny Co. is budgeting sales of 53,000 units of product Tara for October. The manufacture of one unit of Tara requires 4 pounds of chemical Daisy. During October, Winny plans to reduce the inventory of Daisy by 50,000 pounds and increase the finished goods inventory of Tara by 6,000 units. There’s no Tara work-in-process inventory. How many pounds of Daisy is Winny budgeting to purchase in October?

A. 138,000 C. 186,000

B. 162,000 D. 238,000

12. Earl Company’s direct labor costs for the month of January are as follows:

Actual direct labor hours 18,000

Standard direct labor hours 19,000

Direct labor rate variance—unfavorable $2,160

Total payroll $117,000

What was Earl’s direct labor efficiency variance?

A. $1,200 favorable C. $6,380 favorable

B. $1,800 favorable D. $6,400 favorable

13. The data below relate to the month of April for Monroe, Inc., which uses a standard cost system:

Actual total direct labor $54,200

Actual hours used 16,500

Standard hours allowed for good output 16,250

Direct labor rate variance—debit $1,400

Actual total overhead $53,100

Budgeted fixed overhead $12,000

“Normal” activity in hours 16,000

Total overhead application rate per standard direct labor hour $3.25

What was Monroe’s volume variance for April?

A. $187.50 favorable ‘ C. $437.50 favorable

B. $187.50 unfavorable D. $437.50 unfavorable

14. The standard direct material to produce one unit of Product A is four yards of material at $2.50 per yard. During June, 4,200 yards of material costing $10,080 are purchased and used to produce 1,000 units of Product A. What was the material price variance for June?

A. $400 favorable C. $80 unfavorable

B. $420 favorable D. $480 unfavorable

15. Which one of the following standard cost variances would be leastcontrollable by a production supervisor?

A. Overhead volume C. Labor efficiency

B. Overhead controllable D. Material usage

16. The materials price variance, in a standard cost system, is obtained by multiplying the

A. actual price by the difference between actual quantity purchased and standard quantity used.

B. actual quantity by the difference between actual price and the standard price.

C. standard price by the difference between standard quantity purchased and standard quantity used.

D. standard quantity by the difference between actual price and standard price.

17. Flexible budgeting is a reporting system in which the

A. statements included in the budget report vary from period to period.

B. budget standards may be adjusted at will.

C. reporting dates vary according to the levels of activity reported upon.

D. planned level of activity is adjusted to the actual level of activity before the budget comparison report is prepared.

18. If a company uses a predetermined rate for absorbing manufacturing overhead, the volume variance is the

A. underapplied or overapplied variable cost element of overhead.

B. underapplied or overapplied fixed cost element of overhead.

C. difference in budgeted costs and actual costs of fixed overhead items.

D. difference in budgeted costs and actual costs of variable overhead items.

18. Elgin Company’s budgeted fixed factory overhead costs are $50,000 per month, plus a variable factory overhead rate of $4.00 per direct labor hour. The standard direct labor hours allowed for October production were 20,000. An analysis of the factory overhead indicates that in October Elgin had an unfavorable budget (controllable) variance of $1,500 and a favorable volume variance of $500. Elgin uses a two-variance analysis of overhead variances.

What is Elgin’s applied factory overhead for October?

A. $128,000 C. $130,000

B. $129,500 D. $130,500

19. Why might it be misleading to view an unfavorable variance on a performance report as indicative of inferior performance?

A. Actual results are beyond the control of the manager being evaluated.

B. The unfavorable variance may be the result of the company’s having used attainable standards rather than ideal standards.

C. The standard may need to be updated.

D. Variance analysis is for purposes of income determination, not performance evaluation.

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Lesson 3 Standard Cost Accounting_EXAMINATION NUMBER: 06164900

$23.00

Description

Lesson
3 Standard Cost Accounting

EXAMINATION
NUMBER:
06164900

Questions 1-20: Select the one best answer to each
question.

1. A company uses a two-variance analysis for overhead
variances—controllable variances and volume
variances.

The volume variance is based on the

A. total
overhead application rate.

B. total
expenses at various activity levels.

C. variable
overhead application rate.

D. fixed
overhead application rate.

2. When using a flexible budget, what will occur to fixed
costs (on a per unit basis) as production increases?

A. Fixed costs
aren’t considered in flexible budgeting.

B. Fixed costs
per unit will decrease.

C. Fixed costs
per unit will remain unchanged.

D. Fixed costs per unit will increase.

3. The Johns Company budgeted overhead at $117,500 for
the period for Department A based on a budgeted volume of 50,000 direct labor
hours. At the end of the period, the factory overhead control account for
Department A had a balance of $124,000. The actual (and allowed) direct labor
hours were 52,000. What was the overapplied (underapplied) overhead for the
period?

A.
$(1,800)
C. $1,800

B.
$(6,500)
D. $6,500

4. Which of the following terms bestdescribes a
characteristic of a system of standard costs?

A. Marginal
costing
C. Management by exception

B. Contribution
approach
D. Standardized accounting

5. What standard cost variance represents the difference
between actual factory overhead incurred and budgeted factory overhead based on
actual hours worked?

A. Volume
variance
C. Efficiency variance

B. Spending
(budget) variance D. Quantity variance

6. When standard costs are used in a process cost
accounting system, how are equivalent units involved or used in the cost report
at standard?

A. Equivalent
units aren’t used.

B. Equivalent
units are computed using a special approach.

C. The
standard equivalent units are multiplied by the actual cost per unit.

D. The actual
equivalent units are multiplied by the standard cost per unit.

7. Information on Armor Company’s overhead costs is as
follows:

Actual variable overhead
$95,000

Actual fixed overhead
$28,000

Standard hours allowed for actual production 30,000

Standard variable overhead rate per direct labor
hour $3.25

Standard fixed overhead rate per direct labor
hour $0.75

What is Armor Company’s total overhead variance?

A. $2,500
favorable
C. $3,000 favorable

B. $2,500
unfavorable
D. $3,000 unfavorable

8. The direct labor costs for Boundary Company are as
follows:

Standard direct labor hours 35,000

Actual direct labor hours
33,500

Direct labor efficiency variance—favorable $12,000

Direct labor rate variance—favorable $3,075

Total payroll
$252,925

What is the company’s standard direct labor rate?

A. $2.63
C.
$8.00

B. $3.87
D. $10.50

9. A flexible budget is appropriate for a

Marketing Budget Service Industry

A. No
No

B. No
Yes

C. Yes No

D. Yes
Yes

10. How should an efficiency variance that is material
in amount
be treated at the end of an accounting period?

A. Reported as
a deferred charge or credit

B. Allocated
among work in process inventory, finished goods inventory, and cost of goods
sold

C. Charged or
credited to cost of goods manufactured

D. Allocated
among cost of goods manufactured, finished goods inventory, and cost of goods
sold

11. Winny Co. is budgeting sales of 53,000 units of
product Tara for October. The manufacture of one unit of Tara requires 4 pounds
of chemical Daisy. During October, Winny plans to reduce the inventory of Daisy
by 50,000 pounds and increase the finished goods inventory of Tara by 6,000
units. There’s no Tara work-in-process inventory. How many pounds of Daisy is
Winny budgeting to purchase in October?

A. 138,000
C. 186,000

B. 162,000
D. 238,000

12. Earl Company’s direct labor costs for the month of
January are as follows:

Actual direct labor hours
18,000

Standard direct labor hours 19,000

Direct labor rate variance—unfavorable $2,160

Total payroll
$117,000

What was Earl’s direct labor efficiency variance?

A. $1,200
favorable
C. $6,380 favorable

B. $1,800
favorable
D. $6,400 favorable

13. The data below relate to the month of April for
Monroe, Inc., which uses a standard cost system:

Actual total direct labor $54,200

Actual hours used
16,500

Standard hours allowed for good output 16,250

Direct labor rate variance—debit
$1,400

Actual total overhead
$53,100

Budgeted fixed overhead $12,000

“Normal” activity in hours
16,000

Total overhead application rate per standard direct
labor hour $3.25

What was Monroe’s volume variance for April?

A. $187.50
favorable ‘
C. $437.50 favorable

B. $187.50
unfavorable
D. $437.50 unfavorable

14. The standard direct material to produce one unit of
Product A is four yards of material at $2.50 per yard. During June, 4,200 yards
of material costing $10,080 are purchased and used to produce 1,000 units of
Product A. What was the material price variance for June?

A. $400
favorable
C. $80 unfavorable

B. $420
favorable
D. $480 unfavorable

15. Which one of the following standard cost variances
would be leastcontrollable by a production supervisor?

A. Overhead
volume
C. Labor efficiency

B. Overhead controllable
D. Material usage

16. The materials price variance, in a standard cost
system, is obtained by multiplying the

A. actual
price by the difference between actual quantity purchased and standard quantity
used.

B. actual
quantity by the difference between actual price and the standard price.

C. standard
price by the difference between standard quantity purchased and standard
quantity used.

D. standard
quantity by the difference between actual price and standard price.

17. Flexible budgeting is a reporting system in which the

A. statements
included in the budget report vary from period to period.

B. budget
standards may be adjusted at will.

C. reporting
dates vary according to the levels of activity reported upon.

D. planned
level of activity is adjusted to the actual level of activity before the budget
comparison report is prepared.

18. If a
company uses a predetermined rate for absorbing manufacturing overhead, the
volume variance is the

A.
underapplied or overapplied variable cost element of overhead.

B.
underapplied or overapplied fixed cost element of overhead.

C. difference
in budgeted costs and actual costs of fixed overhead items.

D. difference
in budgeted costs and actual costs of variable overhead items.

18. Elgin Company’s budgeted fixed factory overhead costs
are $50,000 per month, plus a variable factory overhead rate of $4.00 per
direct labor hour. The standard direct labor hours allowed for October
production were 20,000. An analysis of the factory overhead indicates that in
October Elgin had an unfavorable budget (controllable) variance of $1,500 and a
favorable volume variance of $500. Elgin uses a two-variance analysis of
overhead variances.

What is Elgin’s applied factory overhead for October?

A. $128,000
C. $130,000

B. $129,500
D. $130,500

19. Why might it be misleading to view an unfavorable
variance on a performance report as indicative of inferior performance?

A. Actual
results are beyond the control of the manager being evaluated.

B. The
unfavorable variance may be the result of the company’s having used attainable
standards rather than ideal standards.

C. The
standard may need to be updated.

D. Variance analysis is for purposes of income
determination, not performance evaluation.

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