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Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits for using standard costs? |
Used to indicate where changes in technology and machinery need to be made. |
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Manufacturing companies use standard costs for the following except: |
Variable costs |
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Several people play an essential part in setting standards. Which of the following is incorrect as to setting standards? |
Quality managers provide quality measures that will be used to evaluate rejects. |
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Standards that represent levels of operation that can be attained with reasonable effort are called: |
normal standards |
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Which of the following conditions normally would not indicate that standard costs should be revised? |
Actual costs differed from standard costs for the preceding week. |
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The principle of exceptions allows managers to |
focus on correcting variances between standard costs and actual costs. |
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The standard price and quantity of direct materials are separated because: |
direct materials prices are controlled by the purchasing department, and quantity used is controlled by the production department |
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Standard costs are divided into which of the following components? |
Price Standard and Quantity Standard |
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A favorable cost variance occurs when |
Standard costs are more than actual costs. |
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Total manufacturing cost variance includes: |
Direct materials cost variance, direct labor cost variance, factory overhead cost variance |
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Periodic comparisons between planned objectives and actual performance are reported in: |
budget performance reports |
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Which of the following is not a reason standard costs are separated in two components? |
variances brings attention to discrepancies in the budget and requires managers to revise budgets closer to actual. |
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If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is termed: |
quantity variance |
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If the price paid per unit differs from the standard price per unit for direct materials, the variance is termed: |
price variance |
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If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is termed: |
rate variance |
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If the actual direct labor hours spent producing a commodity differ from the standard hours, the variance is termed: |
time variance |
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The formula to compute direct material quantity variance is to calculate the difference between |
(actual quantity * standard price) – standard costs |
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The formula to compute direct labor rate variance is to calculate the difference between |
actual costs – (actual hours * standard rate) |
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The formula to compute direct labor time variance is to calculate the difference between |
(actual hours * standard rate) – standard costs |
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Which of the following would not lend itself to applying direct labor variances? |
Administrative assistant |
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Which of the following is not a reason for a direct materials quantity variance? |
Material requiring rework |
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The formula to compute direct materials price variance is to calculate the difference between |
actual costs – (actual quantity * standard price) |
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Assuming that the standard fixed overhead rate is based on full capacity, the cost of available but unused productive capacity is indicated by the: |
factory overhead cost volume variance |
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The controllable variance measures: |
the efficiency of using variable overhead resources |
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The unfavorable volume variance may be due to all but the following factors: |
unexpected increases in the cost of utilities |
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Favorable volume variances may be harmful when: |
production in excess of normal capacity cannot be sold |
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Incurring actual indirect factory wages in excess of budgeted amounts for actual production results in a: |
controllable variance |
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A negative fixed overhead volume variance can be caused due to the following except: |
Increase in utility costs |
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The use of standards for nonmanufacturing expenses is: |
not as common as it is for manufacturing costs |
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If at the end of the fiscal year the variances from standard are significant, the variances should be transferred to the: |
work in process, cost of goods sold, and finished goods accounts |
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Variances from standard costs are usually reported to: |
management |
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At the end of the fiscal year, variances from standard costs are usually transferred to the: |
cost of goods sold account |
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