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Exam 22: Performance Evaluation Using Variances From Standard Costs

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Question 21

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Standard costs should always be revised when they differ from actual costs.

A) True
B) False

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Question 22

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Match the following descriptions with the term a-e) it describes: -normal standard

A) Ideal standard
B) Nonfinancial performance measure
C) Currently attainable standard
D) Unfavorable cost variance
E) Favorable cost variance

F) C) and D)
G) B) and C)

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Question 23

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The following data is given for the Stringer Company: Overhead is applied on standard labor hours. -The materials price variance is

The difference between the standard cost of a product and its actual cost is called a variance.

If employees are given bonuses for exceeding normal standards, the standards may be very effective in motivating employees.

The fact that workers are unable to meet a properly determined direct labor standard is sufficient cause to change the standard.

It is correct to rely exclusively on past cost data when establishing standards.

Aquatic Corp.'s standard material requirement to produce one Model 2000 is 15 pounds of material @ $110.00 per pound. Last month, Aquatic purchased 170,000 pounds of material at a total cost of $17,850,000. It used 162,000 pounds to produce 10,000 units of Model 2000. Calculate the materials price variance and materials quantity variance, and indicate whether each variance is favorable or unfavorable.

The formula to the compute direct labor time variance is to calculate the difference between

Match the following descriptions with the term a-e) it describes: -theoretical standard

Which of the following is not a reason standard costs are separated into two components?

Oak Company produces a chair that requires 6 yards of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 48,875 yards. Journalize the entry to record the standard direct materials used in production.

A company must choose either a standard system or nonfinancial performance measures to evaluate the performance of a company.

Japan Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour. Production of 7,700 units required 19,250 hours at an hourly rate of $14.90 per hour. What is the direct labor a) rate variance, b) time variance, and c) total cost variance?

Match the following formulas or descriptions with the term a-e) it defines. -Actual quantity - Standard quantity) × Standard price

The formula to compute the direct material quantity variance is to calculate the difference between

Hsu Company produces a part with a standard of 5 yards of material per unit. The standard price of one yard of material is $8.50. During the month, 8,800 parts were manufactured, using 45,700 yards of material at a cost of $8.30. Determine the a) price variance, b) quantity variance, and c) cost variance.

Match the following formulas or descriptions with the term a-e) it defines. -Actual rate per hour - Standard rate per hour) × Actual hours

The formula to compute the direct materials price variance is to calculate the difference between

What is the direct labor time variance?