Response to the following multiple choice questions:
1) Standard costs for company products are typically used for all except which of the following?
Variance analysis and cost control
Computing production costs in operating budgets
Determining actual costs per unit
Determining the cost of goods completed and transferred to finished goods inventory
2) Performance reports normally include all of the following except
standard costs.
normal capacity.
total plantwide overhead costs.
budgeted costs.
3) Which of the following provides an explanation of why the variable overhead rate is separated from the fixed overhead rate in standard costing?
There is no justifiable reason; their separation is merely to simplify entries.
Both calculations divide by the same direct labor hours, but the numerator is different for each calculation.
The variable overhead rate is calculated using actual direct labor hours, whereas the fixed overhead rate is calculated using normal capacity direct labor hours.
Different application bases are generally appropriate.
4) Multiplying the standard price of direct materials by the standard quantity for direct materials yields
the direct materials price variance.
the direct materials quantity variance.
the standard direct materials cost.
nothing; the two components should be added together.
5) An expression of the hourly labor pay cost per function or job classification that is expected to exist during the next accounting period is the definition of a
direct labor time standard.
direct materials quantity standard.
direct labor rate standard.
variable overhead rate.
6) A flexible budget is most useful
for budgeting and planning purposes.
when actual output equals budgeted output.
as a cost control tool to help evaluate performance.
when a product's cost structure includes variable costs only.
7) In a standard costing system, standard costs eventually flow into the:
Cost of Goods Sold account.
Standard Cost account.
Selling and Administrative Expenses account.
Sales account.
8) The difference between actual quantity used and standard quantity multiplied by standard price is the equation for computing the
direct labor efficiency variance.
direct materials price variance.
direct labor rate variance.
direct materials quantity variance.
9) Which of the following statements is not true?
Performance reports should be tailored to the responsibilities of the manager or department for which they are prepared.
Performance reports normally report standard costs and variances.
Performance reports should contain space for explanation of variances.
Performance reports do not present the causes of variances.
10) Suppose the standard for a given cost during a period was $80,000. The actual cost for the period was $72,000. Under what circumstances would you consider the variance from budget to be a positive performance indication?
The cost is fixed, and actual production was 90 percent of the standard level of budgeted production.
The cost is variable, and the standard cost noted above is the cost at a production level lower than the actual production level.
The cost is variable, and actual production was 90 percent of the standard level of production.
The cost is variable, and actual production was 75 percent of the standard level of production