Question 1

Standard costs are developed for direct materials,direct labour,and variable overhead only.

Accepted Answer

The answer of Standard costs are developed for direct materials,direct...

Question 2

The unit standard quantity of inputs is vital to the computation of total amount of inputs allowed for the actual output and efficiency variances.

Accepted Answer

The unit standard quantity of inputs is a key factor in calculating the total amount of inputs permitted for the actual output and efficiency variances, making the statement true.

Question 3

To determine whether variances are significant,managers set control limits,which represent the acceptable range,plus or minus an allowable deviation.

Accepted Answer

This statement is true. Control limits are established by managers to determine whether variances are significant, and they represent both the acceptable range and an allowable deviation from the mean.

Question 4

The quantity of each input that should be used to produce one unit of output is documented on the standard cost sheet.

Accepted Answer

Yes, the standard cost sheet includes information about the quantity of inputs required to produce one unit of output. This helps in setting production targets and identifying any variances in actual input usage.

Question 5

Managers develop price standards when they determine what amount should be paid for the quantity of input to be used.

Accepted Answer

Managers do develop price standards when determining the cost of inputs to be used in production. This helps them to control costs and ensure that products are priced competitively in the market.

Question 6

The standard quantity of materials allowed can be calculated by multiplying the unit quantity standard by the actual output.

Accepted Answer

This statement is true. The standard quantity of materials allowed is the expected or planned amount of materials that are permitted to be used in the production process. It can be calculated by multiplying the unit quantity standard (the amount of materials that should be used per unit of output) by the actual output.

Question 7

To compute the standard direct labour hours allowed,multiply the unit labour standard by the standard output.

Accepted Answer

The answer of To compute the standard direct labour hours...

Question 8

The sum of the material price and material usage variances will add up to the total materials variance only if the materials purchased is equal to the materials used.

Accepted Answer

This is because the total materials variance is the difference between the actual cost of materials used and the budgeted cost of materials that should have been used. If the materials purchased is equal to the materials used, then the budgeted cost and actual cost will be the same, and therefore the sum of the material price and material usage variances will add up to the total materials variance.

Question 9

One reason for adopting a standard cost system is to make product costing easier.

Accepted Answer

Standard cost system provides predetermined cost for each process or product, which simplifies the process of product costing by eliminating the need for detailed analysis of actual costs.

Question 10

If a process-costing system uses standard costing to assign product costs,there is no need to compute a unit cost for each equivalent unit cost category since a standard unit cost would exist for each category.

Accepted Answer

Standard costing already assigns a predetermined cost to each unit cost category, so there is no need to compute a unit cost for each category.

Question 11

The standard cost sheet provides the input standards needed to compute the total amount of inputs allowed for the actual output,an essential component in computing efficiency variances.

Accepted Answer

The statement accurately describes the purpose and use of a standard cost sheet in computing efficiency variances.

Question 12

Currently attainable standards can be achieved under efficient operating conditions.

Accepted Answer

Standards are set based on efficient operating conditions, and thus should be attainable under those conditions.

Question 13

A favourable price variance occurs whenever the actual prices are greater than the standard prices.

Accepted Answer

A favourable price variance occurs when the actual prices are less than the standard prices, not greater. This means the company is spending less than expected on materials or other inputs, which can result in a higher profit margin.

Question 14

The actual quantity of input at the standard price less than the standard quantity of input at the actual price equals the usage variance.

Accepted Answer

The actual quantity of input at the standard price less than the standard quantity of input at the actual price equals the price variance, not the usage variance. The usage variance is determined by the difference between the standard quantity of input and the actual quantity of input used, multiplied by the standard price per unit.

Question 15

Managers develop quantity standards when they decide what amount of input should be used per unit of output.

Accepted Answer

Managers do develop quantity standards in order to determine the amount of input that should be used to produce a unit of output. This helps with planning and optimizing production processes.

Question 16

The standard cost per unit of output for a particular input is calculated by multiplying the standard price per unit by the standard number of units produced.

Accepted Answer

The answer of The standard cost per unit of output...

Question 17

The benefits of operational control,however,may not extend to the manufacturing environments that are emphasizing continuous improvement and just-in-time (JIT)purchasing and manufacturing.

Accepted Answer

Continuous improvement and JIT prioritize flexibility and adaptability, which may not be possible with strict operational control measures.

Question 18

The actual quantity of input at the actual price less the actual quantity of input at the standard price is the price variance.

Accepted Answer

The formula for price variance is: (Actual Price - Standard Price) x Actual Quantity. Therefore, the actual quantity of input at the actual price less the actual quantity of input at the standard price gives us the quantity variance.

Question 19

The total budget variance is the difference between the actual cost of the input and its actual cost.

Accepted Answer

The total budget variance is the difference between the budgeted cost of the input and its actual cost.

Question 20

A favourable usage variance would occur when the actual usage of inputs is greater than the standard usage.

Accepted Answer

The answer of A favourable usage variance would occur when...

Quiz 10: Standard Costing: a Managerial Control Tool