Study4smart

Quality review Materials

ch24Student:

1. Standard costs can serve as a basis for evaluating actual performance. True False

2. Standard material, labor, and overhead costs can be obtained from standard cost tables published by the Institute of Management Accountants.

True False

3. Standard costs provide a basis for assessing the reasonableness of actual costs incurred for producing a product or service.

True False

4. When standard costs are used, factory overhead is assigned to products with a predetermined standard overhead rate.

True False

5. Companies promoting continuous improvement strive to achieve practical standards rather than ideal standards.

True False

6. While companies strive to achieve ideal standards, reality implies that some loss of materials usually occurs with any process.

True False

7. A cost variance is the difference between actual cost and standard cost. True False

8. A budget performance report that includes variances can have variances caused by both price differences and quantity differences.

True False

9. A cost variance equals the sum of the quantity variance and the price variance. True False

10. When computing a price variance, the price is held constant. True False

11. Within the same budget performance report, it is impossible to have both favorable and unfavorable variances.

True False

12. Cost variances are ignored under management by exception. True False

13. Management by exception allows managers to focus on the most significant variances inperformance. True False

14. Variable budget is another name for a flexible budget. True False

15. Fixed budget performance reports compare actual results with the expected amounts in the fixed budget.

True False

16. Another name for a static budget is a variable budget. True False

17. Fixed budgets are also known as flexible budgets. True False

18. The amounts in a flexible budget are based on one expected level of sales or production. True False

19. A variable or flexible budget is so named because it only focuses on variable costs. True False

20. A fixed budget performance report never provides useful information for evaluating variances. True False

21. Sales variances allow managers to focus on sales mix as well as sales quantities. True False

22. Sales variances may be computed in a manner similar to cost variances-that is, computing both price and volume variances.

True False

23. A flexible budget expresses all costs on a per unit basis. True False

24. Although a fixed budget is only useful over the relevant range of operations, a flexible budget is useful over all possible production levels.

True False

25. A flexible budget expresses variable costs on a per unit basis and fixed costs on a total basis. True False

26. The purchasing department is often responsible for the price paid for materials that may create a direct materials price variance.

True False

27. A direct labor cost variance may be broken down into a controllable variance and a volume variance. True False

28. When the actual cost of direct materials used exceeds the standard cost, the company must have experienced an unfavorable direct materials price variance.

True False

29. A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased inferior materials.

True False

30. One possible explanation for direct labor rate and efficiency variances is the use of workers with different skill levels.

True False

31. An overhead cost variance is the difference between the actual overhead incurred for the period and the standard overhead applied.

True False

32. A volume variance is the difference between overhead at maximum production volume and that at the budgeted production volume.

True False

33. An unfavorable variance is recorded with a debit. True False

34. If cost variances are material, they should always be closed directly to Cost of Goods Sold. True False