ACCCOB3 - Chapter 10

A ___ is a benchmark for measuring performance. They relate to the quantities and prices of (inputs used/outputs produced) in manufacturing goods or providing services.

A ___ is a benchmark for measuring performance. They relate to the quantities and prices of (inputs used/outputs produced) in manufacturing goods or providing services.

standard; inputs used

A type of standard that specifies how much of an input should be used to make a product or provide a service.

quantity standard

A type of standard that specifies how much should be paid for each unit of the input.

price standard

TRUE OR FALSE: The standard quantity per unit does not include an allowance for scrap or spoilage.

FALSE

TRUE OR FALSE: The standard rate per hour includes employment taxes and fringe benefits.

TRUE

The standard rate per unit that a company expects to pay for variable overhead equals the (fixed/variable) portion of the ___.

variable; predetermined overhead rate

A document that shows the standard quantity and standard price of the inputs required to produce a unit of a specific product.

standard cost card

The standard quantity per unit is (added/multiplied) by the standard price per unit to obtain the standard ___ per unit.

multiplied; cost

When standards are compared to actual performance, the difference is referred to as a ___.

variance

The difference between how much of an input was actually used and how much should have been used for the actual level of output; stated in peso terms using the standard price of the input.

quantity variance

The difference between the actual amount paid for an input and the standard amount that should have been paid, multiplied by the actual amount of the input purchased.

price variance

The amount of an input that should have been used to manufacture the actual output.

standard quantity allowed

TRUE OR FALSE: A positive price/quantity/spending variance is favorable while a negative value is unfavorable.

FALSE

TRUE OR FALSE: When actual price per input is less than standard price per input, the materials price variance is unfavorable.

FALSE

TRUE OR FALSE: When actual quantity of input used is greater than standard quantity of input used, the materials quantity variance is unfavorable.

TRUE

TRUE OR FALSE: Materials purchase prices are influenced by the quantity and quality of materials purchased, the number of purchase orders placed with suppliers, how the purchased materials are delivered, and whether the materials are purchased in a rush order.

TRUE

TRUE OR FALSE: The actual price rather than the standard price is used in the final calculations of the quantity variance.

FALSE

TRUE OR FALSE: An unfavorable quantity variance means materials are being used inefficiently.

TRUE; bc actual > standard

TRUE OR FALSE: When actual hours worked is greater than standard hours allowed, the labor efficiency variance is favorable.

FALSE

TRUE OR FALSE: The variable overhead efficiency variance is calculated the same way as the direct labor efficiency variance except direct labor efficiency uses the standard direct labor rate while variable overhead efficiency variance uses the fixed portion of the predetermined overhead rate.

FALSE; VOEV uses the variable portion of the POHR

TRUE OR FALSE: When direct labor is used as the overhead allocation base, whenever the direct labor efficiency variance is favorable, the variable overhead efficiency variance will also be favorable, and vice-versa.

TRUE

TRUE OR FALSE: When the price variance depends on the materials purchased and the quantity variance depends on the materials used, the spending variance equals the sum of the price & quantity variances.

FALSE bc bc they depend on diff quantities (materials purchased vs used)

TRUE OR FALSE: Standardizing costs simplifies bookkeeping.

TRUE

Standard costs fit naturally in an integrated system of "____ accounting” because they establish what costs should be, who should be responsible for them, and whether actual costs are under control.

responsibility

TRUE OR FALSE: Monthly variance reports are often untimely and useless in decision-making processes.

TRUE

The difference between the actual hourly rate and the standard hourly rate, multiplied by actual hours worked.

labor rate variance

TThe production manager is ordinarily responsible for the materials quantity variance. If the actual price were used in the calculation of the materials quantity variance, the production manager's performance evaluation would be unfairly influenced by the efficiency or inefficiency of the purchasing manager.he difference between the actual level of activity and the standard activity allowed for the actual output, multiplied by the variable part of the predetermined overhead rate.

variable overhead efficiency variance

The difference between the actual variable overhead cost incurred and the standard cost that should have been incurred based on the actual activity.

variable overhead rate variance

The ___ manager is ordinarily responsible for the materials quantity variance while the ___ manager handles the materials price variance.

production; purchasing

The difference between a direct material's actual price per unit and its standard price per unit, multiplied by actual quantity of inputs purchased.

material price variance