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Flashcards

Accounting Ch. 9,10,11

yaydjones English 43 cards

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  1. 1Historical experience should be used with caution in setting standards becausethey may perpetuate operating inefficiencies
  2. 2Standards set by engineering studiesa) show the most efficient way of operating.
    b) rigorous guidelines.
    c) may not be achievable by operating personnel.
    d) don't allow operating personnel to have much input.
  3. 3The standard cost per unit ofoutput for a particular input is calculated asStandard input price X Standard input allowed per unit ofoutput produced
  4. 4A currently attainable standard is one thatcan happen under efficient operating conditions
  5. 5An ideal standard is one thatrelies on maximum efficiency.
  6. 6Reasons for adopting a standard costing system includeto make operational control better
  7. 7Standard costs are developed forfixed overhead.
  8. 8The underlying details for the standard cost per unit are provided inthe standard cost sheet
  9. 9The standard quantity of materials allowed is computed asUnit quantity standard X Actual output.
  10. 10The standard direct labor hours allowed is computed asUnit labor standard X Actual output
  11. 11The total (budget) variance is computed as(AP x AQ) - (SP x SQ).
  12. 12Investigating variances from standard isdone if the variance is outside the control limits
  13. 13Responsibility for the materials price variance typically belongs topurchasing.
  14. 14The materials price variance is usually computedwhen materials are purchased
  15. 15Responsibility for the materials usage variance is usually assigned toproduction
  16. 16Responsibility for the labor rate variance typically is assigned toproduction
  17. 17Responsibility for the labor efficiency variance typically is assigned toproduction
  18. 18Which of the following items describes practices surrounding the recording of variances?a) All inventories are usually carried at standard.
    b) Unfavorable variances appear as debits.
    c) Favorable variances appear as credits.
    d) Immaterial variances are usually closed to Cost ofGoods Sold.
  19. 19Which of the following is true concerning significantly large labor variances?They are prorated in Work in Process, Finished Goods, and Cost of Goods Sold
  20. 20For performance reporting, it is best to compare actual costs with budgeted costs usingflexible budgets
  21. 21To create a meaningful performance report, actual costs and expected costs should be comparedat the actual level of activity
  22. 22To help deal with uncertainty, managers should usea before-the-fact flexible budget
  23. 23To help assess performance, managers should usea flexible budget
  24. 24A firm comparing the actual variable costs ofproducing 10,000 units with the total variable costs of a static budget based on 9,000 units would probably seelarge unfavorable variances
  25. 25The total variable overhead variance is the difference betweenthe actual variable overhead and the applied variable overhead.
  26. 26A variable overhead spending variance can occur becausea) prices for individual overhead items go up.
    b) prices for individual overhead items go down.
    c) more of an individual overhead item was used than expected.
    d) less of an individual overhead item was used than expected.
  27. 27Because the calculation of both variances is based on direct labor hours, an unfavorable labor efficiency variance implies thatthe variable overhead efficiency variance will also be unfavorable.
  28. 28The total variable overhead variance can be expressed as the sum ofthe spending and efficiency variances.
  29. 29In a performance report that details the spending and efficiency variances, which of the following columns will be found?a) A cost formula for each item
    b) A budget for actual hours for each item
    c) budget of standard hours for each item
  30. 30The total fixed overhead variance isthe difference between actual and applied fixed overhead costs.
  31. 31The total fixed overhead variance can be expressed as the sum ofthe spending and volume variances
  32. 32Because of the nature of fixed overhead items, the difference between the actual fixed overhead cost and the budgeted fixed overhead islikely to be small
  33. 33A favorable volume variance can occur becausethe actual output was greater than expected or practical capacity
  34. 34Responsibility for the volume variance usually is assigned tothe manufacturing department
  35. 35Activity flexible budgeting makes it possible toa) predict what activity costs will be as activity output changes.
    b) improve traditional budgetary performance reporting.
    c) enhance the ability to manage activities.
    d) enhance the ability to manage activities.
  36. 36In activity-based budgeting, flexible budget formulas are created usingboth unit-level and nonunit-level drivers
  37. 37price standardthe price that should be paid per unit of input (such as pound of material).
  38. 38quantity standardthe quantity of input allowed per unit of output (for example, pounds of material allowed per one unit of product).
  39. 39standard cost sheetcalculates the total standard cost for one unit of product. It lists the standard costs for one unit of product for the following
  40. 40Why Standard Cost Systems Are AdoptedTo improve planning and control.
    To facilitate product costing
  41. 41price or rate variancesthe difference between actual costs of inputs and what the inputs should have cost (standard prices).
  42. 42usage or efficiency variancesthe difference between the actual quantity used and the standard quantity allowed for units produced.
  43. 43favorable varianceIf the actual price or quantity is less than the standard

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Flashcards on Accounting Ch. 9,10,11, created by yaydjones on 14/04/2014.
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