Question 1

Which of the following words do you associate with standard costing?
Please select all that apply.
A) Expected
B) Predictive
C) Actual
D) Planned

Accepted Answer

A,B,D

Question 2

Which of the following statements does not describe variance analysis?
A) Variance analysis is a comparison of actual outcomes with expectations.
B) Variances are used to explain the difference between actual and budgeted results.
C) Variances represent expectations of what costs and revenues will be.
D) Variance analysis helps control operations.

Accepted Answer

Variance analysis involves comparing actual outcomes to budgeted or expected outcomes, not representing expectations themselves.

Question 3

Which one of the following is not a recognized standard under standard costing?
A) Ideal
B) Normal
C) Attainable
D) Actual

Accepted Answer

Actual costs are not considered a standard in standard costing, as standards are predetermined estimates, while actual costs are the real expenses incurred.

Question 4

A standard cost card includes just details of product costs.

Accepted Answer

A standard cost card includes not only product costs but also details such as labor, materials, and overhead costs associated with producing a product.

Question 5

A standard cost is just a best estimate of the costs and revenues associated with a product or service.

Accepted Answer

A standard cost is a predetermined cost that serves as a benchmark for measuring performance, not just an estimate of costs and revenues.

Question 6

A standard cost card includes details of standard selling price, direct materials, direct labour, direct expenses and variable overheads.

Accepted Answer

A standard cost card typically includes details of direct materials, direct labor, direct expenses, and overheads, but not the standard selling price.

Question 7

What is the correct formula for the direct material total variance?
A) (Actual usage of direct materials for actual production - expected usage of direct materials for actual production) x the standard cost for one unit of direct material.
B) Actual expenditure on direct materials for actual production - expected expenditure on direct materials for actual production.
C) What the direct materials for actual production should have cost - what the direct materials for actual production actually cost.
D) Expected expenditure on materials - (actual production units x standard materials cost per unit of production).

Accepted Answer

The answer of What is the correct formula for the...

Question 8

What is the correct formula for the direct material price variance?
A) Actual expenditure on direct materials for actual production - expected expenditure on direct materials for actual production.
B) (Actual usage of direct materials for actual production - expected usage of direct materials for actual production) x the standard cost for one unit of direct material.
C) What the direct materials for actual production should have cost - what the direct materials for actual production actually cost.
D) What the direct materials for expected production should have cost - what the direct materials for actual production actually cost.

Accepted Answer

The answer of What is the correct formula for the...

Question 9

What is the correct formula for the direct material usage variance?
A) (The direct materials that should have been used in actual production - the actual direct materials used in actual production) x the actual cost for one unit of direct material.
B) Actual expenditure on direct materials used in actual production - expected expenditure on direct materials used in actual production.
C) What the direct materials used in actual production should have cost - what the direct materials used in actual production actually cost.
D) (The direct materials that should have been used in actual production - the actual direct materials used in actual production) x the standard cost for one unit of direct material.

Accepted Answer

The direct material usage variance is calculated by taking the difference between the standard quantity of materials that should have been used for the actual production and the actual quantity used, then multiplying by the standard cost per unit of material.

Question 10

Maria bakes and sells cakes for special occasions. Each cake requires 0.5 kilograms of flour. Flour costs £1.20 per kilogram. During May, Maria expected to bake 500 cakes. However, due to additional demand, she baked 600 cakes and her total flour cost for the month was £420 for 360 kilograms. What was Maria's direct material total variance for the month of May?
A) £12 Favourable
B) £60 Unfavourable
C) £72 Unfavourable
D) £72 Favourable

Accepted Answer

The answer of Maria bakes and sells cakes for special...

Question 11

ABC Limited uses a standard costing system for all its products. ABC Limited produces shirts. Each shirt uses a standard 3 metres of material at a standard cost of £5.50 per metre. Budgeted production is 5,000 shirts per annum. During the financial year ended 30 April 2019, ABC produced 5,500 shirts. The cost of each metre of material was £5.30 and 2.8 metres of material were used in each shirt produced. Based on the above information, what is the direct material total variance for the year ended 30 April 2019?
A) £3,080 Favourable
B) £5,830 Favourable
C) £6,050 Favourable
D) £9,130 Favourable

Accepted Answer

The direct material total variance is calculated as the difference between the standard cost of actual production and the actual cost. Standard cost = 5,500 shirts * 3 metres/shirt * £5.50/metre = £90,750. Actual cost = 5,500 shirts * 2.8 metres/shirt * £5.30/metre = £81,620. Variance = £90,750 - £81,620 = £9,130 Favourable.

Question 12

MSC Limited uses a standard costing system for all its products. MSC Limited produces hoodies. Each hoodie uses a standard 5 metres of material at a standard cost of £3 per metre. Budgeted production is 2,000 hoodies per annum. During the financial year ended 30 April 2019, MSC produced 2,200 hoodies. The cost of each metre of material was £3.25 and 4.8 metres of material were used in each hoodie produced. Based on the above information, what is the direct material price variance for the year ended 30 April 2019?
A) £1,320 Favourable
B) £1,320 Unfavourable
C) £2,400 Unfavourable
D) £2,640 Unfavourable

Accepted Answer

The answer of MSC Limited uses a standard costing system...

Question 13

ZTC Limited uses a standard costing system for its products. ZTC Limited produces soft drinks. Each litre of soft drink uses 0.5 litres of fruit juice at a standard cost of £0.40 per litre. Budgeted production for June is 50,000 litres of soft drinks. Actual production for June was 55,000 litres. Total fruit juice used in June was 28,000 litres which cost £11,500. Based on the above information, what is the direct material price variance for June?
A) £200 Unfavourable
B) £300 Unfavourable
C) £500 Unfavourable
D) £1,500 Unfavourable

Accepted Answer

The answer of ZTC Limited uses a standard costing system...

Question 14

Zany Cushion Covers Limited uses a standard costing system. Each cushion cover uses a standard 2 metres of material at a standard cost of £1.50 per metre. Budgeted production is 2,000 cushion covers per month. During November, Zany Cushion Covers Limited produced 2,200 cushion covers, using 4,950 metres of material at a cost of £6,930. Based on the above information, what is the direct material price variance for November?
A) £300 Unfavourable
B) £330 Unfavourable
C) £495 Favourable
D) £825 Unfavourable

Accepted Answer

The answer of Zany Cushion Covers Limited uses a standard...

Question 15

BFM Limited uses a standard costing system for all its products. BFM Limited produces Product
A) £1,800 Unfavourable
B) £4,000 Favourable
C) £4,500 Favourable
D) £6,300 Unfavourable

Accepted Answer

The standard cost of the product is £18,000. The actual cost of the product is £13,500. The difference between the standard cost and the actual cost is £4,500. This is a favourable variance, as the actual cost is lower than the standard cost.

Question 16

BTG Limited uses a standard costing system for all its products. BTG Limited produces Product
A) £10,625 Unfavourable
B) £13,750 Favourable
C) £14,375 Favourable
D) £25,000 Unfavourable

Accepted Answer

The answer of BTG Limited uses a standard costing system...

Question 17

Podcaster University Press uses a standard costing system for all its book production. The standard paper usage for the Accounting Standards Book is 600 sheets at a cost of £1.20 for 500 sheets. Budgeted production of the Accounting Standards book is 5,000 copies per annum. During the financial year ended 31 December 2018, Podcaster University Press printed 5,500 copies of the Accounting Standards book, using a total of 3,600,000 sheets of paper at a cost of £1.25 per 500 sheets. Based on the above information, what is the direct material usage variance for the Accounting Standards book in the year ended 31 December 2018?
A) £360 Unfavourable
B) £720 Unfavourable
C) £750 Unfavourable
D) £1,080 Unfavourable

Accepted Answer

The answer of Podcaster University Press uses a standard costing...

Question 18

(The labour hours that should have been used for actual production - the labour hours that were actually used for actual production) x standard rate per hour. Which variance is calculated using this formula?
A) Direct Labour Efficiency Variance
B) Direct Labour Total Variance
C) Direct Labour Rate Variance
D) Variable Overhead Efficiency Variance

Accepted Answer

The formula calculates the Direct Labour Efficiency Variance, which measures the efficiency of labor by comparing the actual hours worked to the standard hours expected for the actual production level, multiplied by the standard rate per hour.

Question 19

What is the correct formula for the direct labour rate variance?
A) Actual expenditure on direct labour for actual production - expected expenditure on direct labour for actual production.
B) (Expected direct labour hours for actual production - actual direct labour hours for actual production) x the standard cost for one hour of direct labour.
C) What the actual direct labour hours for actual production should have cost - what the actual direct labour hours for actual production actually cost.
D) What the direct labour for expected production should have cost - what the direct labour for actual production actually cost.

Accepted Answer

The answer of What is the correct formula for the...

Question 20

What is the correct formula for the direct labour total variance?
A) (Expected hours of direct labour for actual production - actual hours of direct labour for actual production) x the standard cost for one hour of direct labour.
B) Expected expenditure on direct labour - (actual production units x standard labour hour cost per unit of production).
C) (Actual direct labour hours for actual production x standard cost) - what the actual direct labour hours for actual production actually cost.
D) Actual expenditure on direct labour for actual production - expected expenditure on direct labour for actual production.

Accepted Answer

The answer of What is the correct formula for the...

Quiz 10: Standard Costing and Variance Analysis

Which of the following words do you associate with standard costing? Please select all that apply.

Which of the following statements does not describe variance analysis?

Which one of the following is not a recognized standard under standard costing?

A standard cost card includes just details of product costs.

A standard cost is just a best estimate of the costs and revenues associated with a product or service.

A standard cost card includes details of standard selling price, direct materials, direct labour, direct expenses and variable overheads.

What is the correct formula for the direct material total variance?

What is the correct formula for the direct material price variance?

What is the correct formula for the direct material usage variance?

BFM Limited uses a standard costing system for all its products. BFM Limited produces Product

BTG Limited uses a standard costing system for all its products. BTG Limited produces Product

(The labour hours that should have been used for actual production - the labour hours that were actually used for actual production) x standard rate per hour. Which variance is calculated using this formula?

What is the correct formula for the direct labour rate variance?

What is the correct formula for the direct labour total variance?