Chapter 25, Standard Costs and Balanced Scorecard Video Solutions, Accounting Principles , Tenth Edition

Problem 1

Standards differ from budgets in that:
a. budgets but not standards may be used in valuing inventories.
b. budgets but not standards may be journalized and posted.
c. budgets are a total amount and standards are a unit amount.
d. only budgets contribute to management planning and control.

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Problem 2

Standard costs:
a. are imposed by governmental agencies.
b. are predetermined unit costs which companies use as measures of performance.
c. can be used by manufacturing companies but not by service or not-for-profit companies.
d. All of the above.

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Problem 3

The advantages of standard costs include all of the following except:
a. management by exception may be used.
b. management planning is facilitated.
c. they may simplify the costing of inventories.
d. management must use a static budget.

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Problem 4

Normal standards:
a. allow for rest periods, machine breakdowns, and setup time.
b. represent levels of performance under perfect operating conditions.
c. are rarely used because managers believe they lower workforce morale.
d. are more likely than ideal standards to result in unethical practices.

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Problem 5

The setting of standards is:
a. a managerial accounting decision.
b. a management decision.
c. a worker decision.
d. preferably set at the ideal level of performance.

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Problem 6

Each of the following formulas is correct except:
a. Labor price variance $=$ (Actual hours $\times$ Actual rate) (Actual hours $\times$ Standard rate).
b. Total materials variance $=$ (Actual quantity $\times$ Actual price) - (Standard quantity $\times$ Standard price).
c. Materials price variance $=$ (Actual quantity $\times$ Actual price) - (Standard quantity $\times$ Standard price).
d. Total labor variance - (Actual hours $\times$ Actual rate) (Standard hours $\times$ Standard rate)

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Problem 7

In producing product A A, 6, 300 pounds of direct materials were used at a cost of $$\$ 1.10$$ per pound. The standard was 6,000 pounds at $$\$ 1.00$$ per pound. The direct materials quantity variance is:
a. $$\$ 330$$ unfavorable.
c. $$\$ 600$$ unfavorable.
b. $$\$ 300$$ unfavorable.
d. $$\$630$$ unfavorable.

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Problem 8

In producing product $$77,14,800$$ direct labor hours were used at a rate of $$\$ 8,20$$ per hour. The standard was 15,000 hours at $$\$ 8.00$$ per hour. Based on these data. the direct Labor:
a. quantity variance is $$\$ 1.600$$ favorable.
b. quantity variance is $$\$ 1,600$$ unfavorable.
c. price variance is $$\$ 2,960$$ favorable.
d. price variance is $$\$ 3,000$$ unfavorable.

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Problem 9

Which of the following is correct about the total overhead variance?
a. Budgeted overhead and overhead applied are the same.
b. Total actual overhead is composed of variable overhead, fixed overhead, and period costs.
c. Standard hours actually worked are used in computing the variance.
d. Standard hours allowed for the work done is the measure used in computing the variance.

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Problem 10

The formula for computing the total overhead variance is: a. actual overhead less overhead applied.
b. overhead budgeted less overhead applied.
c. actual overhead less overhead budgeted.
d. No correct answer given.

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Problem 11

Which of the following is incorred about variance reports?
a. They facilitate "management by exception,"
b. They should only be sent to the top level of management.
c. They should be prepared as soon as possible.
d. They may vary in form, content, and frequency among companies.

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Problem 12

In using variance reports to evaluate cost control, management nomally looks into:
a. all variances.
b. favorable variances only.
c. unfavorable variances only.
d. both favorable and unfavorable variances that exceed a predetermined quantitative measure such as a percentage or dollar amount.

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Problem 13

Generally accepted accounting principles allow a company to:
a. report inventory at standard cost but cost of goods sold must be reported at actual cost.
b. report cost of goods sold at standard cost but inventory must be reported at actual cost.
c. report inventory and cost of goods sold at standard cost as long as there are no significant differences between actual and standard cost.
d. report inventory and cost of goods sold only at actual costs; standard costing is never permitted.

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Problem 14

Which of the following would not be an objective used in the customer perspective of the balanced scorecard approach?
a. Percentage of customers who would recommend product to a friend.
b. Customer retention.
c. Brand recognition.
d. Earnings per share.

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Problem 15

Which of the following is incorrect about a standard cost accounting system?
a. It is applicable to job onder costing.
b. It is applicable to process costing.
c. It reports only favorable variances.
d. It keeps separate accounts for each variance,

Oluwadamilola Ameobi

Numerade Educator

Problem 16

The formula to compute the overhead volume variance is: 1. Fixed overhead rate $\times$ (Standard hours - Actual hours).
b. Fixed overhead rate $\times$ (Normal capacity hours - Actual hours).
c. Fixed overhead rate $\times$ (Normal capacity hours Standard hours allowed).
d. (Variable overhead rate + Fixed overhead rate) $x$ (Normal capacity hours - Standard hours allowed).

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