Short questions on standard costing and flexible budgeting.
1. Which of the following is NOT true about variances in general?
a.The total variance is the difference between the budgeted cost for the budgeted activity level and the actual cost a that level
b.The total variance can be decomposed into usage and price variances.
c.A performance report shows the total variance for various costs
d.All of these statements are true about variances.
2. Which of the following is NOT true about currently attainable standards?
a.they are based on an efficiently operating work force
b.they are based on ideal conditions
c.they allow for downtime and rest periods
d.they are based on present production processes and technology
3. Which statement about the selection of standards is true?
a.Ideal standards tend to extract higher performance levels since they give employees something to live up to.
b.Currently attainable standards may encourage operating inefficiencies.
c.Currently attainable standards discourage employees from achieving their full performance potential.
d.Ideal standards demand maximum efficiency, which may leave workers frustrated, thus causing a decline in performance.
4. Which budget is necessary to determine standard variances?
a.static budget
b.flexible budget
c.both the static and flexible budget
d.neither budget is necessary
5. When should variances be investigated?
a.when they fall out of the accepted range or the control limit
b.when the variances are unfavorable
c.when the variances are over $10,000
d.all variances should be investigated
6. During May, 6,000 pounds of raw materials were purchased at a cost of $2.60 per pound. If there was a favorable materials price variance of $900 for December, the standard cost per pound must be
a.$2.75
b.$2.60
c.$2.45
d.none of the above
7. During April, 80,000 units of product were produced. The standard quantity of material allowed per unit was two pounds at a standard cost of $5 per pound. If there was a favorable materials usage variance of $40,000 for April, the actual quantity of materials used must have been
a.168,000 pounds
b.152,000 pounds
c.84,000 pounds
d.76,000 pounds
Figure 9-1
Max Company has developed the following standards for one of its products:
Direct materials 15 pounds X $16 per pound
Direct labor 4 hours X $24 per hour
Variable overhead 4 hours X$14 per hour
The following activities occurred during the month of October:
The company records materials price variances at the time of purchase.
|
Materials purchased
|
10,000 pounds costing $170,000
|
|
Materials used
|
7,200 pounds
|
|
Units produced
|
500 units
|
|
Direct labor
|
2,300 hours at $23.60 per hour
|
|
Actual variable overhead
|
$30,000
|
8. Refer to Figure 9-1. Max's variable standard cost per unit would be
a. $392
b. $336
c. $296
d. $152
9. Refer to Figure 9-1. Max's materials price variance would be
a. $50,000 favorable
b. $50,000 unfavorable
c. $10,000 unfavorable
d. $10,000 favorable
10. Refer to Figure 9-1. Max's labor efficiency variance would be
a. $7,200 unfavorable
b. $7,200 favorable
c. $6,280 unfavorable
d. $6,280 favorable