Multiple Choice Questions

A labor efficiency variance resulting from the use of poor quality materials should be charged to:
  • the purchasing agent.
  • Purchasing.
  • Purchasing agent
  • the purchase of low quality materials.
When computing standard cost variances, the difference between actual and standard price multiplied by actual quantity yields a(n):
  • price variance.
  • Process Time.
  • Purchasing.
  • ideal standards.
Which of the following statements is correct?
  • All of the above answers are correct.
  • A favorable variance may indicate the existence of unfavorable conditions.
  • Ideal standards are better suited for cash budgeting than practical standards.
  • A favorable materials usage variance
An unfavorable materials quantity variance indicates that:
  • actual usage of material exceeds the standard material allowed for output.
  • an unfavorable materials quantity variance.
  • actual hours exceeded standard hours allowed for the actual output
  • the standard rate exceeds the actual rate.
Which of the following represents value-added time in the manufacturing cycle?
  • Purchasing agent
  • Process Time.
  • Production supervisor
  • Purchasing.
The purchasing agent of the Clampett Company ordered materials of lower quality in an effort to economize on price and in response to the demands of the production manager due to a mistake in production scheduling. The materials were shipped by airfreight at a rate higher than that ordinarily charged for shipment by truck, resulting in an unfavorable materials price variance. The lower quality material proved to be unsuitable on the production line and resulted in excessive waste. In this situation, who should be held responsible for the materials price and quantity variances?
  • Materials price variance.
  • multiplying standard hours allowed for the output of the period times the predetermined rate.
  • the contribution margin lost by failing to meet the target denominator level of activity.
  • Materials Price Variance: Production ManagerMaterials Quantity Variance: Purchasing Agent
If the actual labor hours worked exceed the standard labor hours allowed, what type of variance will occur?
  • A favorable labor price variance
  • A favorable materials usage variance
  • Unfavorable labor efficiency variance.
  • actual quantity of inputs × (actual price − standard price).
A favorable materials price variance coupled with an unfavorable material usage variance would MOST likely result from:
  • the purchase of low quality materials.
  • an unfavorable materials quantity variance.
  • the purchasing agent.
  • unfavorable overhead volume variance.
The difference between actual materials cost per unit and the standard materials cost per unit multiplied by actual quantity used is known as a:
  • Materials price variance.
  • when materials are purchased.
  • Materials Price Variance: Production ManagerMaterials Quantity Variance: Purchasing Agent
  • price variance.
The economic impact of the inability to reach a target denominator level of activity would best be measured by:
  • the contribution margin lost by failing to meet the target denominator level of activity.
  • When practical standards are used, there is no reason to adjust standards if an old machine is replaced by a newer, faster machine.
  • the actual output in units multiplied by the standard input allowed.
  • Ideal standards are better suited for cash budgeting than practical standards.
Which department should usually be held responsible for an unfavorable materials price variance?
  • Purchasing agent
  • the purchasing agent.
  • Process Time.
  • Purchasing.
What is the result when the actual rate paid for labor is less than the standard rate?
  • A favorable materials usage variance
  • A favorable variance may indicate the existence of unfavorable conditions.
  • A favorable labor price variance
  • unfavorable overhead volume variance.
Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the direct labor efficiency variance is unfavorable, the variable overhead efficiency variance will be:
  • price variance.
  • unfavorable.
  • an unfavorable materials quantity variance.
  • unfavorable overhead volume variance.
Which of the following statements concerning practical standards is incorrect?
  • Variable overhead variances are not based on the same general formulas used to compute the materials and labor price variances.
  • A favorable variance may indicate the existence of unfavorable conditions.
  • Ideal standards are better suited for cash budgeting than practical standards.
  • When practical standards are used, there is no reason to adjust standards if an old machine is replaced by a newer, faster machine.
The materials price variance should be computed:
  • the standard rate exceeds the actual rate.
  • Materials price variance.
  • an unfavorable materials quantity variance.
  • when materials are purchased.
The general model for calculating a price variance is:
  • actual quantity of inputs × (actual price − standard price).
  • the actual output in units multiplied by the standard input allowed.
  • actual hours exceeded standard hours allowed for the actual output
  • actual usage of material exceeds the standard material allowed for output.
Which of the following statements concerning ideal standards is incorrect?
  • Ideal standards are better suited for cash budgeting than practical standards.
  • When practical standards are used, there is no reason to adjust standards if an old machine is replaced by a newer, faster machine.
  • A favorable variance may indicate the existence of unfavorable conditions.
  • Variable overhead variances are not based on the same general formulas used to compute the materials and labor price variances.
The standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times are referred to as:
  • ideal standards.
  • Practical standards.
  • Ideal standards are better suited for cash budgeting than practical standards.
  • price variance.
Overhead is applied to work in process in a standard costing system by:
  • the actual output in units multiplied by the standard input allowed.
  • actual usage of material exceeds the standard material allowed for output.
  • multiplying standard hours allowed for the output of the period times the predetermined rate.
  • Ideal standards are better suited for cash budgeting than practical standards.
An unfavorable direct labor efficiency variance could be caused by:
  • actual usage of material exceeds the standard material allowed for output.
  • an unfavorable materials quantity variance.
  • the standard rate exceeds the actual rate.
  • A favorable materials usage variance
Standards that do allow for normal down time and can be achieved with reasonable amounts of effort are known as:
  • Practical standards.
  • Ideal standards.
  • Materials price variance.
  • price variance.
Which manager is usually held responsible for materials price variances?
  • Purchasing agent
  • Production supervisor
  • Purchasing.
  • Process Time.
Which manager is usually held responsible for labor price variances?
  • Practical standards.
  • Production supervisor
  • Purchasing agent
  • Process Time.
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Multiple Choice Questions
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