Test Bank For Standard Costing

1. The type of standard that is intended to represent challenging yet attainable
results is:
A. theoretical standard
B. flexible budget standard
C. controllable cost standard
D. normal standard
E. expected actual standard
A 2. Standard costs are used for all of the following except:
A. income determination
B. controlling costs
C. measuring efficiencies
D. forming a basis for price setting
E. establishing budgets
C 3. Of the following variances, the one that is most useful in assessing the
performance of the Purchasing Department is the:
A. idle capacity variance
B. overhead price variance
C. materials purchase price variance
D. labor rate variance
E. materials price usage variance
B 4. The labor efficiency variance is computed as:
A. the difference between standard and actual rates, multiplied by standard
hours
B. the difference between standard and actual hours, multiplied by standard
rate
C. the difference between standard and actual rates, multiplied by actual
hours
D. the difference between standard and actual hours, multiplied by the
difference between standard and actual rates
E. a percentage of the labor time variance
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B 5. The method used to assure fairness in the rates paid for each operation
performed by an employee is:
A. job costing
B. job rating
C. union contracting
D. the agreed-upon wages at the time of employment
E. labor rate variance analysis
D 6. Materials and labor cost standards are generally based on:
A. expected actual conditions, anticipated prices, and desired efficiency levels
B. theoretical conditions, present price levels, and desired efficiency levels
C. capacity conditions, anticipated prices, and desired efficiency levels
D. normal conditions, present price levels, and desired efficiency levels
E. theoretical conditions, anticipated prices, and theoretically attainable
efficiency levels
D 7. The most effective standards are set following a careful study of products and
operating conditions by the:
A. Accounting Department, central management, and the Industrial
Engineering Department
B. central management and the employees whose performance is being
evaluated
C. Accounting Department and engineering staff
D. Industrial Engineering Department and the employees whose performance
is being evaluated
E. central management and the Industrial Engineering Department
E 8. In analyzing factory overhead variances, the volume variance is the difference
between the:
A. actual amount spent for overhead items during the period and the amount
applied during the period
B. variable efficiency variance and fixed efficiency variance
C. amount shown in the flexible budget and the amount shown in the master
budget
D. master budget application rate and the flexible budget application rate,
multiplied by actual hours worked
E. budget allowance based on standard hours allowed for actual production for
the period and the amount of applied factory overhead during the period
D 9. The variance resulting from obtaining an output different from the one expected
on the basis of input is the:
A. mix variance
B. output variance
C. usage variance
D. yield variance
E. efficiency variance
A 10. In its reports to management, a company disclosed the presence of a fixed
efficiency variance. The procedure used to analyze variances was the:
A. four-variance method
B. mix and yield variances method
C. two-variance method
D. alternative three-variance method
E. three-variance method