361-Chapter-7-MC-Solutions

Chapter7—StandardCostingandVarianceAnalysisMULTIPLECHOICE1.Aprimarypurposeofusingastandardcostsystemisa.tomakethingseasierformanagersintheproductionfacility.b.toprovideadistinctmeasureofcostcontrol.c.tominimizethecostperunitofproduction.d.bandcarecorrect.ANS:BPTS:1DIF:EasyOBJ:7-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting2.Thestandardcostcardcontainsquantitiesandcostsfora.directmaterialonly.b.directlaboronly.c.directmaterialanddirectlaboronly.d.directmaterial,directlabor,andoverhead.ANS:DPTS:1DIF:EasyOBJ:7-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting3.Whichofthefollowingstatementsregardingstandardcostsystemsistrue?a.Favorablevariancesarenotnecessarilygoodvariances.b.Managerswillinvestigateallvariancesfromstandard.c.Theproductionsupervisorisgenerallyresponsibleformaterialpricevariances.d.Standardcostscannotbeusedforplanningpurposessincecostsnormallychangeinthefuture.ANS:APTS:1DIF:EasyOBJ:7-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting4.Inastandardcostsystem,WorkinProcessInventoryisordinarilydebitedwitha.actualcostsofmaterialandlaborandapredeterminedoverheadcostforoverhead.b.standardcostsbasedonthelevelofinputactivity(suchasdirectlaborhoursworked).c.standardcostsbasedonproductionoutput.d.actualcostsofmaterial,labor,andoverhead.ANS:CPTS:1DIF:EasyOBJ:7-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,ReportingChapter725.Astandardcostsystemmaybeusedina.jobordercosting,butnotprocesscosting.b.processcosting,butnotjobordercosting.c.eitherjobordercostingorprocesscosting.d.neitherjobordercostingnorprocesscosting.ANS:CPTS:1DIF:EasyOBJ:7-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting6.Standardcostsmaybeusedfora.productcosting.b.planning.c.controlling.d.alloftheabove.ANS:DPTS:1DIF:EasyOBJ:7-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting7.Apurposeofstandardcostingistoa.replacebudgetsandbudgeting.b.simplifycostingprocedures.c.eliminatetheneedforactualcostingforexternalreportingpurposes.d.eliminatetheneedtoaccountforyear-endunderappliedoroverappliedmanufacturingoverhead.ANS:BPTS:1DIF:EasyOBJ:7-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting8.Standardcostsa.areestimatesofcostsattainableonlyunderthemostidealconditions.b.aredifficulttousewithaprocesscostingsystem.c.can,ifproperlyused,helpmotivateemployees.d.requirethatsignificantunfavorablevariancesbeinvestigated,butdonotrequirethatsignificantfavorablevariancesbeinvestigated.ANS:CPTS:1DIF:EasyOBJ:7-1NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting9.Abillofmaterialdoesnotincludea.quantityofcomponentinputs.b.priceofcomponentinputs.c.qualityofcomponentinputs.d.typeofproductoutput.ANS:BPTS:1DIF:EasyOBJ:7-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,ReportingChapter7310.Anoperationsflowdocumenta.tracksthecostandquantityofmaterialthroughanoperation.b.tracksthenetworkofcontrolpointsfromreceiptofacustomer'sorderthroughthedeliveryofthefinishedproduct.c.specifiestaskstomakeaunitandthetimesallowedforeachtask.d.chartstheshortestpathbywhichtoarrangemachinesforcompletingproducts.ANS:CPTS:1DIF:ModerateOBJ:7-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting11.Atotalvarianceisbestdefinedasthedifferencebetweentotala.actualcostandtotalcostappliedforthestandardoutputoftheperiod.b.standardcostandtotalcostappliedtoproduction.c.actualcostandtotalstandardcostoftheactualinputoftheperiod.d.actualcostandtotalcostappliedfortheactualoutputoftheperiod.ANS:DPTS:1DIF:EasyOBJ:7-2NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting12.Theterm“standardhoursallowed”measuresa.budgetedoutputatactualhours.b.budgetedoutputatstandardhours.c.actualoutputatstandardhours.d.actualoutputatactualhours.ANS:CPTS:1DIF:EasyOBJ:7-3NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting13.Alargelaborefficiencyvarianceisproratedtowhichofthefollowingatyear-end?WIPFGCostofGoodsSoldInventoryInventorya.nononob.noyesyesc.yesnonod.yesyesyesANS:DPTS:1DIF:EasyOBJ:7-3NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,Reporting14.Whichofthefollowingfactorsshouldnotbeconsideredwhendecidingwhethertoinvestigateavariance?a.magnitudeofthevarianceb.trendofthevariancesovertimec.likelihoodthataninvestigationwillreduceoreliminatefutureoccurrencesofthevarianced.whetherthevarianceisfavorableorunfavorableANS:DPTS:1DIF:EasyOBJ:7-3NAT:AACSB:ReflectiveThinkingLOC:AICPAFunctionalCompetencies:Measurement,ReportingChapter7415.Attheendofaperiod,asignificantmaterialquantityvarianceshouldbea.closedtoCostofGoodsSold.b.allocatedamongRawMaterial,WorkinProcess,FinishedGoods,andCostofGoodsSold.c.allocatedamongWorkinProcess,FinishedGoods,andCostofGoodsSold.d.carriedforwardasabalancesheetaccounttothenextperiod.ANS:CPTS:1DIF:EasyOBJ:7-3NAT:AACSB:ReflectiveThinki