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Exam 7: Performance Evaluation Using Variances From Standard Costs

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Question 51

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Since the controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable.

A) True
B) False

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Question 52

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Which of the following is not a reason for a direct materials quantity variance?

A) malfunctioning equipment
B) purchasing of inferior raw materials
C) increased material cost per unit
D) spoilage of materials

E) B) and C)
F) C) and D)

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Question 53

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

Though favorable fixed factory overhead volume variances are usually good news, if inventory levels are too high, additional production could be harmful.

Non-financial measures are often linked to the inputs or outputs of an activity or process.

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 favorable.

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

Calculate the direct labor rate variance.

Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials spoilage.

If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is a

The labor time variance is

Variances from standard costs are reported to

What is the direct labor time variance?

What is the amount of the variable factory overhead controllable variance?

Standard costs are determined by multiplying expected price by expected quantity.

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

Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.

Standard and actual costs for direct labor for the manufacture of 300 units of product were as follows: Actual costs 125 hours @ $54.00 Standard costs 131 hours @ $53.00 Determine the direct labor a time variance, b rate variance, and c total cost variance.

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials quantity variance was $2,200 unfavorable.

Currently attainable standards do not allow for reasonable production difficulties.