Strayer ACC560 Week 8 Quiz 11

ACC 560 Week 8 Quiz 11TRUE-FALSE STATEMENTSInventories cannot be valued at standard cost in Financial Statements. 2. Standard cost is the industry average cost for a particular item.A standard is a unit amount, whereas a budget is a total amount. 4. Standard costs may be incorporated into the accounts in the general ledger. 5. An advantage of standard costs is that they simplify costing of inventories and reduce clerical costs. 6. Setting standard costs is relatively simple because it is done entirely by accountants. 7. Normal standards should be rigorous but attainable. 8. Actual costs that vary from standard costs always indicate inefficiencies. 9. Ideal standards will generally result in favorable variances for the company. 10. Normal standards incorporate normal contingencies of production into the standards. 11. Once set, normal standards should not be changed during the year. 12. In developing a standard cost for direct materials, a price factor and a quantity factor must be considered. 13. A direct labor price standard is frequently called the direct labor efficiency standard. 14. The standard predetermined overhead rate must be based on direct labor hours as the standard activity index. 15. Standard cost cards are the subsidiary ledger for the Work in Process account in a standard cost system. 16. A variance is the difference between actual costs and standard costs. 17. If actual costs are less than standard costs, the variance is favorable. 18. A materials quantity variance is calculated as the difference between the standard direct materials price and the actual direct materials price multiplied by the actual quantity of direct materials used. 19. An unfavorable labor quantity variance indicates that the actual number of direct labor hours worked was greater than the number of direct labor hours that should have been worked for the output attained. 20. Standard cost + price variance + quantity variance = Budgeted cost. 21. The overhead controllable variance relates primarily to fixed overhead costs. 22. The overhead volume variance relates only to fixed overhead costs. 23. If production exceeds normal capacity, the overhead volume variance will be favorable. 24. There could be instances where the production department is responsible for a direct materials price variance. 25. The starting point for determining the causes of an unfavorable materials price variance is the purchasing department. 26. The total overhead variance is the difference between actual overhead costs and overhead costs applied to work done. 27. Variance analysis facilitates the principle of “management by exception.” 28. A credit to a Materials Quantity Variance account indicates that the actual quantity of direct materials used was greater than the standard quantity of direct materials allowed. 29. A standard cost system may be used with a job order cost system but not with a process cost system. 30. A debit to the Overhead Volume Variance account indicates that the standard hours allowed for the output produced was greater than the standard hours at normal capacity. 31. In concept, standards and budgets are essentially the same. 32. Standards may be useful in setting selling prices for finished goods. 33. The materials price standard is based on the purchasing department’s best estimate of the cost of raw materials. 34. The materials price variance is normally caused by the production department. 35. The use of an inexperienced worker instead of an experienced employee can result in a favorable labor price variance but probably an unfavorable quantity variance. 36. In using variance reports, top management normally looks carefully at every variance. 37. The use of standard costs in inventory costing is prohibited in financial statements.a38. The overhead controllable variance is the difference between the actual overhead costs incurred and the budgeted costs for the standard hours allowed.MULTIPLE CHOICE QUESTIONS 39. What is a standard cost?a. The total number of units times the budgeted amount expectedb. Any amount that appears on a budgetc. The total amount that appears on the budget for product costsd. The amount management thinks should be incurred to produce a good or service 40. A standard cost isa. a cost which is paid for a group of similar products.b. the average cost in an industry.c. a predetermined cost.d. the historical cost of producing a product last year. 41. The difference between a budget and a standard is thata. a budget expresses what costs were, while a standard expresses what costs should be.b. a budget expresses management’s plans, while a standard reflects what actually happened.c. a budget expresses a total amount, while a standard expresses a unit amount.d. standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system. 42. Standard costs may be used bya. universities.b. governmental agencies.c. charitable organizations.d. all of these. 43. Which of the following statements is false?a. A standard cost is more accurate than a budgeted cost.b. A standard is a unit amount.c. In concept, standards and budgets are essentially the same.d. The standard cost of a product is equivalent to the budgeted cost per unit of product. 44. Budget data are not journalized in cost accounting systems with the exception ofa. the application of manufacturing overhead.b. direct labor budgets.c. direct materials budgets.d. cash budget data. 45. It is possible that a company’s financial statements may report inventories ata. budgeted costs.b. standard costs.c. both budgeted and standard costs.d. none of these. 46. A standard differs from a budget because a standarda. is a predetermined cost.b. contributes to management planning and control.c. is a unit amount.d. none of the above; a standard does not differ from a budget. 47. Marburg Co. expects direct materials cost of $6 per unit for 100,000 units (a total of $600,000 of direct materials costs). Marburg’s standard direct materials cost and budgeted direct materials cost is Standard Budgeteda. $6 per unit $600,000 per yearb. $6 per unit $6 per unitc. $600,000 per year $6 per unitd. $600,000 per year $600,000 per year 48. Using standard costsa. makes employees less “cost-conscious.”b. provides a basis for evaluating cost control.c. makes management by exception more difficult.d. increases clerical costs. 49. Using standard costsa. can make management planning more difficult.b. promotes greater economy.c. does not help in setting prices.d. weakens management control. 50. If standard costs are incorporated into the accounting system,a. it may simplify the costing of inventories and reduce clerical costs.b. it can eliminate the need for the budgeting process.c. the accounting system will produce information which is less relevant than the historical cost accounting system.d. approval of the shareholders is required. 51. Standard costsa. may show past cost experience.b. help establish expected future costs.c. are the budgeted cost per unit in the present.d. all of these. 52. Which of the following statements about standard costs is false?a. Properly set standards should promote efficiency.b. Standard costs facilitate management planning.c. Standards should not be used in “management by exception.”d. Standard costs can simplify the costing of inventories. 53. Which of the following is not considered an advantage of using standard costs?a. Standard costs can reduce clerical costs.b. Standard costs can be useful in setting prices for finished goods.c. Standard costs can be used as a means of finding fault with performance.d. Standard costs can make employees “cost-conscious.” 54. If a company is concerned with the potential negative effects of establishing standards, it shoulda. set loose standards that are easy to fulfill.b. offer wage incentives to those meeting standards.c. not employ any standards.d. set tight standards in order to motivate people. 55. A standard which represents an efficient level of performance that is attainable under expected operating conditions is called a(n)a. ideal standard.b. loose standard.c. tight standard.d. normal standard. 56. Ideal standardsa. are rigorous but attainable.b. are the standards generally used in a master budget.c. reflect .strtutorials.com/ACC-560-WK-8-Quiz-11-All-Possible-Questions-027.htm” style=”margin: 0px; padding: 0px; border: 0px; outline: 0px; vertical-align: baseline; color: rgb(155, 136, 31);”>OPTIMAL PERFORMANCE under perfect operating conditions.d. will always motivate employees to achieve the maximum output. 57. The final decision as to what standard costs should be is the responsibility ofa. the quality control engineer.b. the managerial accountants.c. the purchasing agent.d. management. 58. The labor time requirements for standards may be determined by thea. sales manager.b. product manager.c. industrial engineers.d. payroll department manager. 59. The two levels that standards may be set at area. normal and fully efficient.b. normal and ideal.c. ideal and less efficient.d. fully efficient and fully effective. 60. The most rigorous of all standards is thea. normal standard.b. realistic standard.c. ideal standard.d. conceivable standard.More Questions are Included