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Chapter 23--Performance Evaluation Using Variances from Standard Costs Student: ___________________________________________________________________________ 1. A variable cost system is an accounting system where standards are set for each manufacturing cost element. True False 2. One reason not to depend solely on historical records to set standards is that there may be inefficiencies contained in past costs. True False 3. Standard costs serve as a device for measuring efficiency. True False 4. The standard cost is how much a product should cost to manufacture. True False 5. Standard costs can be used with both the process cost and job order cost systems. True False 6. Cost systems using detailed estimates of each element of manufacturing cost entering into the finished product are called standard cost systems. True False 7. Cost systems using detailed estimates of each element of manufacturing cost entering into the finished product are called budgeted cost systems. True False 8. Normally standard costs should be revised when labor rates change to incorporate new union contracts. True False 55. Which of the following conditions normally wouldnotindicate that standard costs should be revised?a. The engineering department has revised product specifications in responding to customer suggestions.b. The company has signed a new union contract that increases the factory wages on average by $3.50 anhour.c. Actual costs differed from standard costs for the preceding week.d. The average price of raw materials increased from $4.68 per pound to $4.82 per pound.ANSWER:c DIFFICULTY:ModerateBloom’s: RememberingLEARNING OBJECTIVES:ACCT.WARD.16.23-01 - 23-01ACCREDITING STANDARDS:ACCT.ACBSP.APC.27 - Managerial Accounting Features/CostsACCT.ACBSP.APC.36 - Budgeting and ResponsibilityACCT.IMA.09 - Performance MeasurementBUSPROG: Analytic56. Standards that represent levels of operation that can be attained with reasonable effort are called Get answer to your question and much more DIFFICULTY:ModerateBloom’s: RememberingLEARNING OBJECTIVES:ACCT.WARD.16.23-01 - 23-01ACCREDITING STANDARDS:ACCT.ACBSP.APC.27 - Managerial Accounting Features/CostsACCT.ACBSP.APC.36 - Budgeting and ResponsibilityACCT.IMA.09 - Performance MeasurementBUSPROG: Analytic57. Standard costs are used in companies for a variety of reasons. Which of the following isnotone of the benefitsforusing standard costs? Get answer to your question and much more DIFFICULTY:EasyBloom’s: RememberingLEARNING OBJECTIVES:ACCT.WARD.16.23-01 - 23-01ACCREDITING STANDARDS:ACCT.ACBSP.APC.27 - Managerial Accounting Features/CostsACCT.ACBSP.APC.36 - Budgeting and ResponsibilityACCT.IMA.09 - Performance Measurement Which of the following is not a reason standard costs are separated into two components?The correct option is (d).
If any differences or discrepancies brings in by the variances in the budget and requires managers to revise budgets closer to actual is not considered as the reason behind the separation of standard cost into two different components.
Who are variances from standard costs are reported to?When standards are compared to actual performance numbers, the difference is what we call a “variance.” Variances are computed for both the price and quantity of materials, labor, and variable overhead and are reported to management.
Which of the following is a reason for an unfavorable fixed factory overhead volume variance?An unfavorable fixed overhead budget variance results when the actual amount spent on fixed manufacturing overhead costs exceeds the budgeted amount. The fixed overhead budget variance is also known as the fixed overhead spending variance.
When actual costs are lower than standard costs it is said to be a?The total variance is favorable if the actual costs are less than standard costs. The total direct materials variance is $2,835 favorable and consists of a $3,000 favorable price variance and a $165 unfavorable quantity variance.
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Which of the following conditions normally would not indicate that standard costs should be revised?
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