acycst2 variance

The split-off is the point in a joint production process when two or more products became separately identifiable.

T

The focus of joint costing is on allocating costs to the individual products at the split-off point.

T

Separable costs are all costs incurred beyond the split-off point that are assignable to each of the specific products identified at the split-off point such as manufacturing, marketing, and distribution.

T

A favorable variable overhead efficiency variance indicates that the company used more than planned of the cost-allocation base.

F

All favorable overhead variances decrease operating income compared to the budget.

F

The production volume variance arises both for fixed and variable costs.

F

There is no efficiency variance for variable costs because a given lump sum of fixed costs will be unaffected by how efficiently labor-hours or machine-hours are used to produce output in a given budget period.

F

A standard is attainable through efficient operations but allows for normal disruptions such as machine breakdowns and defective production.

T

Scrap are the products of a joint production process that have low total sales values compared with the total sales value of the main product or of joint products.

F

The distinction among main products, joint products, and byproducts are not so definite. In practice, it is important to understand how a specific company chooses to classify its products.

T

Overhead costs have been increasing due to all of the following EXCEPT:

A. increased automation

B. tracing more costs as direct costs with the help of technology

C. more complexity in distribution processes

D. all of the above

B

In a standard costing system, a cost-allocation base would most likely be:

A. standard machine-hours

B. actual machine-hours

C. normal machine-hours

D. all of the above

A

The variable overhead flexible-budget variance can be further subdivided into the:

A. spending variance and the efficiency variance

B. price variance and the efficiency variance

C. static-budget variance and sales-volume variance

D. sales-volume variance and the spending variance

A

An unfavorable variable overhead spending variance indicates that:

A. variable overhead items were not used efficiently

B. the variable overhead cost-allocation base was not used efficiently

C. the price of variable overhead items was more than budgeted

D. the denominator level was not accurately determined

C

An unfavorable fixed overhead spending variance indicates that:

A. there was more excess capacity than planned

B. the fixed overhead cost-allocation base was not used efficiently

C. the price of fixed overhead items cost more than budgeted

D. the denominator level was more than planned

C

If a company obtains two salable products from the refining of one ore, the refining process should be accounted for as a(n)

A. mixed cost process.

B. joint process.

C. extractive process.

D. reduction process.

B

Joint costs are allocated to joint products to

A. obtain a cost per unit for financial statement purposes.

B. provide accurate management information on selling prices of each type of product.

C. compute variances from expected costs for each joint product.

D. allow the use of high-low analysis by the company.

A

Joint cost allocation is useful for

A. decision making.

B. product costing.

C. control.

D. evaluating managers' performance.

B

Joint costs are useful for

A. setting the selling price of a product.

B. evaluating management by means of a responsibility reporting system.

C. determining inventory cost for accounting purposes.

D. determining whether to continue producing an item.

C

Which of the following components of production are allocable as joint costs when a single manufacturing process produces several salable products?

A. direct material and direct labor only

B. direct labor and overhead only

C. overhead and direct material only

D. direct material and conversion cost

D

There is no efficiency variance for variable costs because a given lump sum of fixed costs will be unaffected by how efficiently labor-hours or machine-hours are used to produce output in a given budget period. 

F

Production costs are all costs incurred beyond the split-off point that are assignable to each of the specific products identified at the split-off point such as manufacturing, marketing, and distribution. 

F

The production volume variance arises only for fixed costs. 

T

The production volume variance arises both for fixed and variable costs. 

F

There is no efficiency variance for fixed costs because a given lump sum of fixed costs will be unaffected by how efficiently labor-hours or machine-hours are used to produce output in a given budget period. 

T

Byproducts are the products of a joint production process that have low total sales values compared with the total sales value of the main product or of joint products. 

T

The split-off point is the point at which

 

A. joint costs are allocated to joint products.

B. some products may first be sold.

C. output is first identifiable as individual products.

D. all of the above.

D

The variances that should be investigated by management include:

 

A. all variances, both favorable and unfavorable

 

B. only favorable variances

 

C. only unfavorable variances

 

D. both favorable and unfavorable variances considered significant in amount for the company

D

A favorable rate variance for direct manufacturing labor might indicate that:

 

A. an efficient labor force

 

B. actual direct labor rate is higher than expected

 

C. employees were paid more than planned

 

D. underskilled employees are being hired

D

Flexible budgets are prepared at the beginning of the budget period using expected output levels.

F

The sales method is more commonly used in practice for byproduct accounting because the amounts involved are often immaterial and this method avoids the complexity of tracking inventory or costs for byproducts. 

T

Joint costs are incurred only after the splitoff point in a joint production process. 

F

Which factor is least important when selecting a joint cost allocation method?

A. The allocation's impact on the decision-making process for separable costs.

B. The ability to measure sales value at the splitoff point.

C. The consistency with financial reporting and tax requirements.

D. The physical characteristics of the joint products.

A

When byproducts are produced during a manufacturing process, how are byproduct revenues typically accounted for in the production method?

A. Allocated proportionally to all joint products based on physical units.

B. Recorded as a separate revenue line item in the income statement.

C. Deducted from the total manufacturing cost of the primary products. 

D. Deferred as a liability until the byproduct is sold.

C

Which of the following is a defining characteristic of joint products?

 

A. They are always of equal value in terms of sales revenue.

B. Their production requires no cost allocation at the splitoff point.

C. They are produced from separate and distinct production processes.

D. They share common inputs and incur joint costs up to the splitoff point.

D

What is the primary purpose of using a standard costing system?

A. To record actual costs for all production activities.

B. To provide a benchmark allowing companies to measure actual performance against standards and identify variances.

C. To ignore variances after the production process is complete.

D. To eliminate the need for budgeting in production planning.

B