Managerial Accounting Creating Value in a Dynamic Business Environment 10th edition By Hilton -Test Bank

Managerial Accounting Creating Value in a Dynamic Business Environment 10th edition By Hilton -Test Bank

Chapter 10
Standard Costing, and Analysis of Direct Costs

True / False Questions

1. Variances are computed by taking the difference between the product cost and standard cost.

True False

2. Normal defect rates in an assembly process would be considered if a company desires to establish a series of practical manufacturing standards.

True False

3. A favorable labor efficiency variance is created when actual labor hours worked exceed standard hours allowed.

True False

4. The Purchasing Department would normally begin an investigation regarding an unfavorable materials quantity variance.

True False

5. One of the most important conditions for the successful use of standard costing is a stable production process.

True False

Multiple Choice Questions

6. A standard cost:

A. is the “true” cost of a unit of production.

B. is a budget for the production of one unit of a product or service.

C. can be useful in calculating equivalent units.

D. is normally the average cost within an industry.

E. is almost always the actual cost from previous years.

7. Which of the following is a predetermined estimated cost that can be used in the calculation of a variance?

A. Product cost.

B. Actual cost.

C. Standard cost.

D. Differential cost.

E. Marginal cost.

8. Variances are computed by taking the difference between which of the following?

A. Product cost and period cost.

B. Actual cost and differential cost.

C. Price factors and rate factors.

D. Actual cost and standard cost.

E. Product cost and standard cost.

9. The term “management by exception” is best defined as:

A. choosing exceptional managers.

B. controlling actions of subordinates through acceptance of management techniques.

C. investigating unfavorable variances.

D. devoting management time to investigate significant variances.

E. controlling costs so that non-zero variances are treated as “exceptional.”

10. Which of the following are methods for setting standards?

A. Analysis of historical data and goal congruence.

B. Task analysis and matrix application forms.

C. Task analysis and the analysis of historical data.

D. Matrix application forms and analysis of historical data.

E. Goal congruence and task analysis.