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| 1 | |
What is a standard cost? |
| | A) | An estimated cost based on historical data |
| | B) | A budget for the production of one unit of product or service |
| | C) | An actual cost reduced to a practical level |
| | D) | None of the above |
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| 2 | |
How are cost variances measured? |
| | A) | Comparing standard costs with actual costs. |
| | B) | Comparing actual costs with historical costs. |
| | C) | Comparing standard costs with historical costs. |
| | D) | Comparing ideal standards to standard costs. |
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| 3 | |
The term management by exception refers to which of the following? |
| | A) | Investigating all unfavorable cost variances |
| | B) | Investigating all favorable cost variances |
| | C) | Investigating significant cost variances |
| | D) | Setting standards that are acceptable to management |
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| 4 | |
Which are the two methods used by managerial accountants to set cost standards? |
| | A) | Analysis of historical data and management by exception |
| | B) | Analysis of historical data and task analysis |
| | C) | Analysis of historical data and variance analysis |
| | D) | Task analysis and a statistical approach |
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| 5 | |
Which of the following can be obtained only under nearly perfect operating conditions? |
| | A) | Practical standards |
| | B) | Perfection standards |
| | C) | Attainable standards |
| | D) | Exceptional standards |
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| 6 | |
Which of the following allows for normal amounts of raw-material waste? |
| | A) | Practical standards |
| | B) | Perfection standards |
| | C) | Ideal standards |
| | D) | Exceptional standards |
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| 7 | |
Which of the following statements is true? |
| | A) | Many managers and behavioral scientists believe that perfection standards encourage and motivate employees in positive ways. |
| | B) | There is disagreement among managers and behavioral scientists that perfection standards encourage and motivate employees in positive ways. |
| | C) | Most behavioral theorists believe that perfection standards encourage more positive and productive employee attitudes than do practical standards. |
| | D) | Both (B) and (C) are true. |
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| 8 | |
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Which of the following statements is true? |
| | A) | The result of A minus B equals the direct-material price variance |
| | B) | The result of B minus C equals the direct-material quantity variance |
| | C) | The result of A minus C equals the total direct-material cost variance |
| | D) | All of the statements are true. |
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| 9 | |
Which of the following statement is false? |
| | A) | The standard direct-material quantity is the total amount of direct-material normally required to produce a finished product, including allowances for normal waste or inefficiency. |
| | B) | The standard direct-material price is the total delivered cost, after subtracting any purchase discounts. |
| | C) | The standard direct-labor quantity is the number of direct-labor hours normally needed to manufacture one unit of product. |
| | D) | The standard direct-labor rate is the total hourly cost of compensation, after subtracting the fringe benefits. |
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| 10 | |
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Which of the following are the direct-material price variance and the direct-material quantity variance, respectively? |
| | A) | $3,750 unfavorable and $2,125 favorable |
| | B) | $3,750 unfavorable and $2,125 unfavorable |
| | C) | $3,625 unfavorable and $2,125 unfavorable |
| | D) | $3,625 unfavorable and $2,250 unfavorable |
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| 11 | |
Using the variable designations given in the textbook for actual and standard quantities, prices, hours, and rates, which of the following expresses the direct-material price variance? |
| | A) | SP(AQ - SQ) |
| | B) | SR(AH - SH) |
| | C) | PQ(AP - SP) |
| | D) | None of the above |
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| 12 | |
The firm budgeted $240,000 for 60,000 units of direct material to complete 30,000 units of finished product. The firm used 51,000 units of material, at a total cost of $198,900, to complete 25,000 units of finished product. The firm utilizes a JIT inventory control system and there were no beginning or ending direct-materials inventory. What is the direct-material price variance? |
| | A) | $ 6,000 favorable |
| | B) | $41,100 unfavorable |
| | C) | $ 5,100 favorable |
| | D) | Cannot be determined from the information provided. |
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| 13 | |
The firm's direct-material quantity variance was an unfavorable variance of $1,900. Actual quantity used was 61,000 units, at a cost of $122,000, for 30,000 units of finished product that require 2 units of direct material each, at standard. What was the standard price for direct material? |
| | A) | Cannot be determined from the information given. |
| | B) | Is greater than the actual unit price. |
| | C) | $1.90 |
| | D) | $2.00 |
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| 14 | |
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Which of the following statements is true? |
| | A) | The result of A minus B equals the direct-labor rate variance |
| | B) | The result of B minus C equals the direct-labor efficiency variance |
| | C) | The result of A minus C equals the total direct-labor cost variance |
| | D) | All of the statements are true. |
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| 15 | |
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Which of the following are the direct-labor rate variance and the direct-labor efficiency variance, respectively? |
| | A) | $7,500 favorable and $7,500 favorable |
| | B) | $7,750 unfavorable and $7,500 favorable |
| | C) | $7,750 favorable and $7,250 unfavorable |
| | D) | $7,500 favorable and $7,250 unfavorable |
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| 16 | |
The firm's favorable direct-labor rate variance was $4,800. Actual labor used was 24,000 direct-labor hours, at a cost of $168,000, for 25,000 units of finished product that require a standard of 1 hour of direct labor per unit. What is the standard rate per direct-labor hour? |
| | A) | $7.20 |
| | B) | $6.80 |
| | C) | $7.00 |
| | D) | Cannot be determined from the information given. |
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| 17 | |
The organization budgeted $400,000 for 40,000 hours of direct labor to complete 16,000 units of finished product. The firm used 42,000 direct-labor hours and completed 17,000 units of finished product. What is the direct-labor rate variance? |
| | A) | $20,000 unfavorable |
| | B) | $25,000 favorable |
| | C) | $25,000 unfavorable |
| | D) | Cannot be determined from the information provided. |
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| 18 | |
Using the variable designations given in the textbook for actual and standard quantities, prices, hours, and rates, which of the following correctly calculate a material or labor variance? |
| | A) | SP(AQ - SQ) |
| | B) | SR(AH - SH) |
| | C) | PQ(AP - SP) |
| | D) | All of the above |
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| 19 | |
Which of the following might be used to determine the significance of a variance? |
| | A) | Size of variance |
| | B) | Recurrence of variance |
| | C) | Trend of variance |
| | D) | All of the above |
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| 20 | |
Which of the following statements is false? |
| | A) | A manager is more likely to follow up on a variance that should be controllable than a variance that is not controllable by anyone in the organization. |
| | B) | It is important to investigate only significant unfavorable variances. |
| | C) | The decision whether to investigate a variance is a cost-benefit decision. |
| | D) | A trend in a variance may also call for investigation. |
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| 21 | |
Which of the following might be used to apply the concept of management by exception? |
| | A) | The size of variance |
| | B) | The recurrence of variance |
| | C) | The trend of variance |
| | D) | All of the above |
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| 22 | |
A statistical control chart plots cost variances across time and compares them with a statistically determined critical value that triggers an investigation. Which of the following is false regarding this critical value? |
| | A) | It is a value determined by assuming that cost variances have a normal probability distribution with a mean of zero. |
| | B) | It is set at some multiple of the distribution's standard deviation. |
| | C) | The critical value is set at the mean (zero) on a statistical control chart. |
| | D) | The cost variance must be unfavorable to reach the critical value. |
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| 23 | |
Where in the organization does responsibility for the direct-material price variance usually lie? |
| | A) | Production supervisor |
| | B) | Chief financial officer |
| | C) | Purchasing manager |
| | D) | Vendors |
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| 24 | |
Where in the organization does responsibility for the direct-material quantity variance lie? |
| | A) | Production supervisor |
| | B) | Chief financial officer |
| | C) | Purchasing manager |
| | D) | Vendors |
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| 25 | |
Where in the organization does responsibility for the direct-labor efficiency variance lie? |
| | A) | Production supervisor |
| | B) | Chief financial officer |
| | C) | Purchasing manager |
| | D) | Vendors |
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| 26 | |
Which of the following is true about an unfavorable direct-material price variance? |
| | A) | It will always cause an unfavorable direct-material quantity variance. |
| | B) | It may create a favorable direct-material quantity variance. |
| | C) | It is related to the direct-labor rate variance. |
| | D) | It is related to the direct-labor efficiency variance. |
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| 27 | |
The purchase of off-standard materials may result in which of the following? |
| | A) | An unfavorable direct-material quantity variance. |
| | B) | An unfavorable direct-labor efficiency variance. |
| | C) | A favorable direct-material price variance. |
| | D) | All of the above. |
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What type of cost system is being used? |
| | A) | Normal costing |
| | B) | Product costing |
| | C) | Actual costing |
| | D) | Standard costing |
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| 29 | |
Which of the following is not an advantage of standard costing? |
| | A) | It provides a basis for sensible cost comparisons. |
| | B) | It enables managers to employee management by exception. |
| | C) | It provides a means of performance evaluation and employee rewards. |
| | D) | It is more expensive than an actual or normal product-costing system. |
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| 30 | |
Which of the following is not a criticism of standard costing in today's manufacturing environment? |
| | A) | With automation, variances tend to be very large. |
| | B) | Shorter product life cycles mean standards are relevant for only a short time. |
| | C) | Too much emphasis on cost and efficiency of direct labor. |
| | D) | Calculated variances come to late to be useful. |
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| 31 | |
Which of the following is not a criticism of a standard-costing system? |
| | A) | It is more expensive than other systems. |
| | B) | Variances calculated under standard-costing come too late to be useful. |
| | C) | It can cause dysfunctional behavior in a JIT/FMS environment. |
| | D) | Traditional cost variances are not tied to specific product lines. |
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| 32 | |
Regarding manufacturing firms that have adopted advanced manufacturing methods, and still continue use of standard costing, what changes have been required to reflect the various features of the advanced manufacturing environment? |
| | A) | Reduce the importance of labor standards and variances |
| | B) | Emphasize material and overhead costs |
| | C) | Shift cost drivers |
| | D) | All of the above |
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| 33 | |
Which of the following is true about a bottleneck operation? |
| | A) | It limits the operation of a particular production segment. |
| | B) | It is related to the operational performance measure of productivity. |
| | C) | It limits the production capacity of the entire facility. |
| | D) | It is related to the operational performance measure of production and delivery. |
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| 34 | |
Manufacturing cycle time is relates to which operational performance measure in today's manufacturing environment? |
| | A) | Product quality |
| | B) | Production and delivery |
| | C) | Machinery |
| | D) | Productivity |
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| 35 | |
Customer-acceptance measures focus on which issue? |
| | A) | Delivery cycle time. |
| | B) | Customer's perception of product quality. |
| | C) | Number of defects found |
| | D) | Percentage of orders filled. |
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| 36 | |
The number of process improvements made relates to which operational performance measure in today's manufacturing environment? |
| | A) | Innovation and learning |
| | B) | Product and delivery. |
| | C) | Productivity |
| | D) | Machinery |
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| 37 | |
Which of the following is not a denominator in the formula for calculating the manufacturing cycle efficiency (MCE)? |
| | A) | Processing time |
| | B) | Move time |
| | C) | Waiting time |
| | D) | Delivery time |
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| 38 | |
At the end of the accounting period, time spent on the production of 10,000 complete units involved the following: process time, 12,000 hours; waiting time, 5,000 hours; move time, 1,000 hours; and inspection time, 180 hours. What was the manufacturing cycle efficiency (MCE) for the production accomplished? |
| | A) | 66.0 percent |
| | B) | 194.1 percent |
| | C) | 51.5 percent |
| | D) | Cannot be determined from the information. |
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| 39 | |
Which of the following is not a perspective under the balanced scorecard? |
| | A) | Financial |
| | B) | Customer |
| | C) | Vendor |
| | D) | Internal operations |
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| 40 | |
On a balanced scorecard, decreasing cycle time is a measure in which perspective? |
| | A) | Financial perspective. |
| | B) | Customer perspective. |
| | C) | Learning and growth perspective. |
| | D) | Internal operations perspective. |
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| 41 | |
On a balanced scorecard, market share is a measure in which perspective? |
| | A) | Financial perspective. |
| | B) | Customer perspective. |
| | C) | Learning and growth perspective. |
| | D) | Internal operations perspective. |
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| 42 | |
On balanced scorecard, the goal of increasing employee retention is a measure in which perspective? |
| | A) | Financial perspective. |
| | B) | Customer perspective. |
| | C) | Learning and growth perspective. |
| | D) | Internal operations perspective. |
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| 43 | |
On a balanced scorecard, the goal of increasing earnings per share is a measure in which perspective? |
| | A) | Financial perspective. |
| | B) | Customer perspective. |
| | C) | Learning and growth perspective. |
| | D) | Internal operations perspective. |
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