Standard Costing and Variance

Analysis - QUIZ(25 Points)

1st Semester 2022 - 2023
1.Which of the following would produce a labor rate variance?Required to
answer. Single choice.
(1 Point)
Poor quality materials causing breakage and work interruptions.
Use of persons with high hourly wage rates in tasks that call for low hourly wage rates.
Excessive number of hours worked in completing a job.
An unfavorable variable overhead spending variance.
2.Which of the following standard costing variances would be least controllable
by a production supervisor?Required to answer. Single choice.
(1 Point)
Overhead volume
Materials usage
Labor efficiency
Overhead efficiency
3.If a company wishes to establish factory overhead budget system in which
estimated costs can be derived directly from estimates of activity levels, it should
prepare aRequired to answer. Single choice.
(1 Point)
Flexible budget
Fixed budget
Capital budget
Discretionary budget
4.The primary difference between a fixed (static) budget and a variable (flexible)
budget is that a fixed budget:Required to answer. Single choice.
(1 Point)
Cannot be changed after the period begins; while a variable budget can be changed after the period
begins
is a plan for a single level of sales (or other measure of activity); while a variable budget consists of
several plans, one for each of several levels of sales (or other measure of activity)
inlcudes only fixed cost; while a variable budget includes only variable cost
is concerned only with future acquisitions of fixed assets; while a variable budget is concerned with
expenses that vary with sales.
5.A company reported a significant materials efficiency variance for the month of
January. All of the following are possible explanations for this variance
exceptRequired to answer. Single choice.
(1 Point)
Cutting back preventive maintenance.
Inadequately training and supervising the labor force.
Processing a large number of rush orders
Producing more units than planned for in the master budget.
6.Which of the following would not explain an adverse direct labor efficiency
variance?Required to answer. Single choice.
(1 Point)
Poor scheduling of direct labor hours
Setting standard efficiency at a level that is too low.
Unusually lengthy machine breakdowns
A reduction in direct labor training
7.One of the primary reasons for using cost variances is:Required to answer.
Single choice.
(1 Point)
they diagnose the cause of the problem and what should be done to correct it
for superiors to communicate expectations to lower level employees
to administer appropriate disciplinary action
for financial control of operating activities and understanding why variances arise
8.A favorable efficiency variance for direct materials might indicate:Required to
answer. Single choice.
(1 Point)
that lower quality materials were purchases
an over-skilled workforce
poor design of products or processes
A lower priced supplier was used
9.An unfavorable price variance for direct materials might indicate:Required to
answer. Single choice.
(1 Point)
that the purchasing manager purchased in smaller quantities due to change to just-in-time inventory
methods
congestion due to scheduling problems
that the purchasing manager skillfully negotiated a better purchase price
that the market had an unexpected oversupply of those materials
10.If the manufacturing machines are breaking down more than expected, this
will contribute to a(n):Required to answer. Single choice.
(1 Point)
favorable, direct manufacturing labor price variance
unfavorable direct manufacturing labor price variance
favorable direct manufacturing labor efficiency variance
unfavorable direct manufacturing labor efficiency variance
11.Variable overhead cost can be managed by:Required to answer. Single choice.
(1 Point)
reducing the consumption of the cost-allocation base
eliminating non value adding variable cost
planning for appropriate capacity levels
Both a and b correct
12.Which of the following statements concerning standard costs is false?Required
to answer. Single choice.
(1 Point)
If properly used, standards can help motivate employees
All variances, whether favorable or unfavorable, should be investigated
Standard costs should be attributable under conditions of efficient operation
A standard cost system may be used with a process costing system or a job order costing systems
13.A standard cost is an estimate of what a cost should be under normal
operating conditions. In establishing standard costs, the following organizational
personnel maybe involved, exceptRequired to answer. Single choice.
(1 Point)
top management
budgetary accountants
quality control personnel
industrial engineers
14.Excess capacity is a signRequired to answer. Single choice.
(1 Point)
that capacity should be reduced
that capacity may need to be re-evaluated
that the company is suffering a significant economic loss
of good management decisions
15.The fixed overhead cost variance can be further subdivided into theRequired
to answer. Single choice.
(1 Point)
price variance and the efficiency variance
spending variance and flexible budget variance
production volume variance and the efficiency variance
flexible-budget variance and the production volume variance
16.The standard cost of one unit of product includes 2 hours of direct labor at P
15.00 per hour. The company's labor rate variance was P 275, favorable. The
efficiency variance was P 105, unfavorable. Three-hundred and eighty units were
produced. What were the actual labor hours?Required to answer. Single choice.
(1 Point)
774
760
753
767
17.Meteor Company uses a standard cost system. Information about its direct
labor costs for Product M for the month of April as follows: SH allowed for actual
production 1,500 Actual hourly rate paid P 61.00 Standard hourly rate P 60.00
Labor efficiency variance, favorable P 6,000 How many direct labor hours were
actually worked during the month of April?Required to answer. Single choice.
(1 Point)
P 1,400
P 1,402
P 1,498
P 1,600
18.Noli Company applies overhead on a direct labor hour basis. Each unit of
product requires 5 direct labor hours. Overhead is applied on a 30 percent
variable and 70 percent fixed basis; the overhead application rate is P 16 per
hour. Standards are based on a normal capacity or 5,000 direct labor hours. Noli
produced 1,010 units of product and incurred 4,900 direct labor hours. Actual
overhead costs for the month was P 80,000. What is the annual budgeted fixed
overhead cost?Required to answer. Single choice.
(1 Point)
P 56,000
P 672,000
P 56,560
P 678,720
19.JS Company produce 500 units with a P 50 unfavorable labor rate variance.
The labor use variance was P 180 favorable. Actual labor cost was P 8,870. The
standard wage rate was P 9. Actual hours wereRequired to answer. Single choice.
(1 Point)
520
980
1,000
1,020
20.For the month of August, M Companys' records disclosed the following data
relating to direct labor Actual direct labor cost P 10,000 Rate variance 1,000 F
Efficiency variance 1,500 UF Standard direct labor cost P 9,500 For the month of
August, M used 2,000 direct labor hours. The company's standard direct labor
rate per hour isRequired to answer. Single choice.
(1 Point)
P 5.50
P 4.75
P 4.50
P 5.00
21.The following direct manufacturing labor information pertains to the
manufacture of product B: Time required to make one unit, 2 direct labor hours
Number of direct workers, 50 Number of productive hours per week, per worker,
40 Weekly wages, per worker, P 500 Workers' benefits treated as direct
manufacturing labor cost, 20% of wages What is the standard direct
manufacturing labor cost per unit of Product B?Required to answer. Single
choice.
(1 Point)
P 30
P 15
P 24
P 12
22.Lucky Company sets the following standards for 2013: Direct labor cost (2 DLH
@ P 4.50), P 9.00 Manufacturing overhead (2 DLH @ P 7.50), P 15.00 Lucky
Company plans to produce its only product equally each month. The annual
budget for overhead cost are: Fixed overhead P 150,000 Variable overhead
300,000 Normal activity in direct labor hours 60,000 In March, Lucky Company
produced 2,450 units with actual direct labor hours used of P 5,050. Actual
overhead costs for the month amounted to P 37,245 (Fixed overhead is as
budgeted) The amount of overhead volume variance for Lucky Company
isRequired to answer. Single choice.
(1 Point)
P 250 U
P 500 U
P 750 U
P 375 U
23.Silver Company has a standard of 15 parts of Component R costing P 1.50
each. Silver purchased 14,910 units of R for P 22,145. Silver generated a P 220
favorable price variance and a P 3,735 favorable usage variance. If there were no
changes in the component of inventory, how may units of finished product were
produced?Required to answer. Single choice.
(1 Point)
P 994
P 1,725
P 1,160
P 828
24.Using more highly skilled workers might affect which of the following
variances?Required to answer. Single choice.
(1 Point)
direct materials usage variance
direct labor efficiency variance
variable manufacturing overhead efficiency variance
all of the above
25.Standard costRequired to answer. Single choice.
(1 Point)
are estimates of costs attainable only under the most ideal conditions
are difficult to use with a process costing system
can, if properly used, help motivate employees
require that significant unfavorable variances be investigated, but do not require that significant
favorable variances be investigated