logo image

Accounting Chapter 22 – Performance Evaluation Using Variances from Standard Costs

Standards that can be attained with reasonable effort are called __________ standards.
normal
ideal
adjusted
theoretical
normal

Feedback: Currently attainable or normal standards allow for normal production difficulties and mistakes and are attainable with reasonable effort.

A standard that does not allow for machine breakdowns, scrap, or breaks is called a __________ standard.
normal
unattainable
theoretical
attainable
theoretical

Feedback: Standards that can be achieved only under perfect operating conditions are known as theoretical or ideal standards.
Objective Association

Standards are set by
accountants.
other management personnel.
manufacturing engineers.
All of these choices are involved in the setting of standards.
All of these choices are involved in the setting of standards.

Feedback: The standard setting process normally requires the joint efforts of accountants, engineers, and other management personnel.

The standards for direct materials, direct labor, and factory overhead are separated into two components:
yards and hours.
actual and budget.
price and quantity.
past and present.
price and quantity.

Feedback: The standards for direct materials, direct labor, and factory overhead are separated into two components: (1) a price standard and (2) a quantity standard.

Standard amounts budgeted are determined by multiplying the standard costs per unit by the __________ production.
planned
actual
theoretical
last year’s
planned

Feedback: The standard amounts budgeted for material purchases, direct labor, and factory overhead are determined by multiplying the standard costs per unit by the planned production level.

Standards are used in the control function to compare
actual performance with other competitors.
actual performance with past performance.
past performance against the budget.
actual performance against the budget.
actual performance against the budget.

Feedback: Standards are used in the control function, or budgetary performance evaluation, which compares the actual performance against the budget.

An income statement reporting variances from standard costs is for
internal use only.
external use only.
either internal or external use.
follows GAAP.
internal use only.

Feedback: An income statement reporting variances from standard costs is for internal use only.

The Strawberry Mansion Company reported the following:

Standard quantity per unit 3 lbs
Standard price per pound $2.75
Actual pounds used 15,000 lbs
Actual price per pound $3.00
Number of units produced 4,900

Determine the direct materials quantity variance.
$825 unfavorable
$825 favorable
$900 favorable
$900 unfavorable

$825 unfavorable

Feedback: [15,000 – (3 × 4,900)] × $2.75 = $825 unfavorable.

The Strawberry Mansion Company reported the following:

Standard quantity per unit 3 lbs
Standard price per pound $2.75
Actual pounds used 15,000 lbs
Actual price per pound $3.00
Number of units produced 4,900

Determine the direct materials price variance.
$3,675 unfavorable
$3,750 favorable
$3,675 favorable
$3,750 unfavorable

$3,750 unfavorable

Feedback: ($3 – $2.75) × 15,000 = $3,750 unfavorable

The Peking Palace reported the following:

Standard quantity per unit 3 lbs
Standard price per pound $2.75
Actual pounds used 15,000 lbs
Actual price per pound $2.90
Number of units produced 5,070

Determine the total direct materials cost variance.
$1,672.50 unfavorable
$1,672.50 favorable
$2,859.00 favorable
$2,859.00 unfavorable

$1,672.50 unfavorable

Feedback: Standard price is higher than actual price.

An unfavorable direct labor rate variance may be caused by all of the following except
shortage of skilled employees.
improper scheduling of employees.
improper use of employees.
None of these choices are correct.
shortage of skilled employees.

Feedback: An unfavorable direct labor time variance may be caused by a shortage of skilled employees.

ordan Industries produced 6,000 units of product that required 1.5 standard hours per unit. The standard variable overhead cost per unit is $2.75 per hour. The actual variable factory overhead was $29,000. Determine the variable factory overhead controllable variance.
$20,000 favorable
$20,000 unfavorable
$4,250 favorable
$4,250 unfavorable
$4,250 unfavorable

Feedback: $29,000 – [(6,000 units × 1.5 hours) × $2.75] = $4,250 unfavorable.

Jordan Industries produced 6,000 units of product that required 1.5 standard hours per unit. The standard fixed overhead cost per unit is $2.05 per hour at 9,500 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance.
$7,175 favorable
$7,175 unfavorable
$1,025 favorable
$1,025 unfavorable
$1,025 unfavorable

Feedback: Actual hours should be multiplied by standard hours per unit to determine the fixed factory overhead volume variance.

Douglas Industries produced 5,500 units of product that required 2.5 standard hours per unit. The standard fixed overhead cost per unit is $2.20 per hour at 13,500 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance.
$250 favorable
$250 unfavorable
$550 favorable
$550 unfavorable
$550 favorable

Feedback: [13,500 hrs. – (5,500 units × 2.5 hours)] × $2.20 = $550 favorable.

The difference between the actual overhead incurred and the budgeted overhead is the
volume variance.
total factory overhead cost variance.
direct labor rate variance.
controllable variance.
controllable variance.

Feedback: The difference between the actual overhead incurred and the budgeted overhead is the controllable variance.

At the end of the period, the balance left in the factory overhead account is called
variable factory overhead controllable variance.
fixed factory overhead volume variance.
factory overhead adjustment variance.
total factory overhead cost variance.
total factory overhead cost variance

Feedback: The end-of-period balance in the factory overhead account, which represents the difference between actual incurred overhead and applied overhead, is the total factory overhead cost variance for the period.

If a company uses standard costs to record their inventory in the general ledger, what would the journal entry be if the direct materials price variance is unfavorable?
Materials Dr. (actual), Accounts Payable Cr.
Materials Dr. (at standard), Direct Materials Price Variance Dr., Accounts Payable Cr.
Materials Dr. (at standard), Accounts Payable Cr.
Materials Dr. (at standard), Direct Materials Price Variance Cr., Accounts Payable Cr.
Materials Dr. (at standard), Direct Materials Price Variance Dr., Accounts Payable Cr

Feedback: The effect of the direct materials price variance is unfavorable.

The Beach Shack Company produced 5,500 cakes that require 3 standard pounds per unit at $3.00 standard price per pound. The company actually used 16,650 pounds in production. Journalize the entry to record the standard direct materials used in production.
Materials Dr., 49,950; Work in Process Cr., 49,500; Direct Materials Quantity Variance Dr., 450.
Work in Process Dr., 49,500; Direct Materials Quantity Variance Dr., 450; Materials Cr., 49,950.
Work in Process Dr., 49,500; Materials Cr., 49,500.
Materials Dr., 49,950; Work in Process Cr., 49,950.
Work in Process Dr., 49,500; Direct Materials Quantity Variance Dr., 450; Materials Cr., 49,950.

Feedback:
Work in Process* 49,500
Direct Materials Quantity Variance 450
Materials** 49,950
*5,500 x 3 lbs x $3 = $49,500
** 16,650 x $3 = $49,950

Which of the following would not be used to measure quality?
number of rejects
number of warranty claims
on-time delivery
time to develop new products
time to develop new products

Feedback: Research and development times do not measure quality of products

Which of the following is an output to a video rental store?
customer wait time to rent a video
number of cashiers available
number of products available
cashier training
customer wait time to rent a video

Feedback: Input measures determines how the activity will impact favorably or unfavorably on an output. Line wait for a customer is considered an output.

Which of the following nonfinancial performance measures could be used by equipment suppliers?
charges to the warranty accrual
an increase in overtime pay
the elapsed time between a customer order and product delivery
a decrease in profit margin
the elapsed time between a customer order and product delivery

Feedback: A non-financial performance measure is a performance measure expressed in units other than dollars.

A standard is a(n)
historical cost.
estimate of acceptable production efficiency.
goal set by upper management to reduce costs.
actual cost.
estimate of acceptable production efficiency.

Feedback: A budget could include a goal set by upper management to reduce costs.

When actual costs are lower than standard costs, it is said to be a(n) __________ variance.
favorable
cost
unfavorable
bad
favorable

Feedback: A favorable variance occurs when the actual cost are less than the standard cost at actual volumes.

The Peking Palace reported the following:

Standard quantity per unit 3 lbs
Standard price per pound $2.75
Actual pounds used 15,000 lbs
Actual price per pound $2.90
Number of units produced 5,070

Determine the direct materials quantity variance
$577.50 favorable
$609.00 unfavorable
$609.00 favorable
$577.50 unfavorable

$577.50 favorable

Feedback: Actual price is not used in this variance. Standard quantity is higher than actual quantity.

An unfavorable direct labor rate variance may be caused by all of the following except
improper use of employees.
shortage of skilled employees.
improper scheduling of employees.
None of these choices are correct.
shortage of skilled employees.

Feedback: An unfavorable direct labor rate variance may be caused by improper scheduling of employees.

Dixon Company produced 6,000 units of product that required 1.5 standard hours per unit. The standard fixed overhead cost per unit is $0.50 per hour at 10,000 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance.
$500 unfavorable
$2,000 unfavorable
$2,000 favorable
$500 favorable
$500 unfavorable

Feedback: Actual hours should be multiplied by standard hours per unit to determine the fixed factory overhead volume variance.

Surfer Sam Company produced 4,000 units of product that required 2.5 standard hours per unit. The standard fixed overhead cost per unit is $0.80 per hour at 10,500 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance.
$400 favorable
$500 unfavorable
$500 favorable
$400 unfavorable
$400 unfavorable

Feedback: Standard hours are greater than actual hours. This calculation is missing the standard fixed overhead cost per unit component.

Underapplied factory overhead represents
a favorable total factory overhead cost variance.
actual factory overhead.
an unfavorable total factory overhead cost variance.
None of these choices are correct
an unfavorable total factory overhead cost variance.

Feedback: Underapplied factory overhead represents an unfavorable total factory overhead cost variance.

If a company uses standard costs to record their inventory in the general ledger, what would the journal entry be if the direct materials price variance is favorable?
Materials Dr. (at standard), Accounts Payable Cr.
Materials Dr. (actual), Accounts Payable Cr.
Materials Dr.(at standard), Direct Materials Price Variance Dr., Accounts Payable Cr.
Materials Dr. (at standard), Direct Materials Price Variance Cr., Accounts Payable Cr.
Materials Dr. (at standard), Direct Materials Price Variance Cr., Accounts Payable Cr.

Feedback: The effect of the direct materials price variance is favorable.

If a company uses standard costs to record their inventory in the general ledger, what would the journal entry be if the direct materials price variance is unfavorable?
Materials Dr. (at standard), Accounts Payable Cr.
Materials Dr. (actual), Accounts Payable Cr.
Materials Dr. (at standard), Direct Materials Price Variance Dr., Accounts Payable Cr.
Materials Dr. (at standard), Direct Materials Price Variance Cr., Accounts Payable Cr.
Materials Dr. (at standard), Direct Materials Price Variance Dr., Accounts Payable Cr.

Feedback: The effect of the direct materials price variance is unfavorable.

The Strawberry Mansion Company produced 5,500 cakes that require 3 standard pounds per unit at $3.00 standard price per pound. The company actually used 16,350 pounds in production. Journalize the entry to record the standard direct materials used in production.
Work in Process Dr., 49,500; Materials Cr., 49,500.
Materials Dr., 49,050; Work in Process Cr., 49,050.
Work in Process Dr., 49,500; Direct Materials Quantity Variance Dr., 450; Materials Cr., 49,950.
Work in Process Dr., 49,500; Direct Materials Quantity Variance Cr., 450; Materials Cr., 49,050.
Work in Process Dr., 49,500; Direct Materials Quantity Variance Cr., 450; Materials Cr., 49,050.

Feedback: The direct materials quantity variance is favorable.

Which of the following measures could be used by a college to measure students’ satisfaction?
student evaluations
increase in enrollment
increase in the number of graduates
All of these choices are correct
All of these choices are correct.

Feedback: Nonfinancial measures such as an increase in students (customers), evaluations, and number of graduates can be used to evaluate the customers’ satisfaction.

All but which one of the following can be used to measure customer satisfaction?
number of warranty claims
number of customer complaints
employee satisfaction
customer preference rankings compared to competitors
employee satisfaction

Feedback: Employee satisfaction is not a nonfinancial performance measure that evaluates customer satisfaction.

Which of the following inputs can be used to increase customer satisfaction in a computer store?
adequate number of sales representatives
product availability
trained personnel
All of these choices are correct.
All of these choices are correct.

Feedback: Customer satisfaction can be increased by a number of actions including improving inputs such as product availability, available service personnel, and employee training

One major objective in setting standards is to
set them high to push employees to work harder and faster.
set them low so employees will not be stressed or pressured.
set them to actual costs.
motivate employees to achieve efficient operations.
motivate employees to achieve efficient operations

Feedback: One of the major objectives in setting standards is to motivate workers to achieve efficient operations.

The Strawberry Mansion Company reported the following:

Standard quantity per unit 3 lbs
Standard price per pound $2.75
Actual pounds used 15,000 lbs
Actual price per pound $3.00
Number of units produced 4,900

Determine the direct materials quantity variance.
$900 favorable
$825 unfavorable
$900 unfavorable
$825 favorable

$825 unfavorable

Feedback: [15,000 – (3 × 4,900)] × $2.75 = $825 unfavorable.

When actual hours exceed standard hours, the result is
an unfavorable direct labor rate variance.
a favorable direct labor rate variance.
an unfavorable direct labor time variance.
a favorable direct labor time variance.
an unfavorable direct labor time variance

Feedback: When actual hours exceed standard hours, the result is an unfavorable direct labor time variance.

Douglas Industries produced 5,500 units of product that required 2.5 standard hours per unit. The standard variable overhead cost per unit is $3.00 per hour. The actual variable factory overhead was $39,000. Determine the variable factory overhead controllable variance.
$2,250 unfavorable
$6,600 favorable
$2,250 favorable
$6,600 unfavorable
$2,250 favorable

Feedback: $39,000 – [(5,500 units × 2.5 hours) × $3.00] = $2,250 favorable.

At the end of the period, the balance left in the factory overhead account is called
factory overhead adjustment variance.
variable factory overhead controllable variance.
total factory overhead cost variance.
fixed factory overhead volume variance.
total factory overhead cost variance.

Feedback: The end-of-period balance in the factory overhead account, which represents the difference between actual incurred overhead and applied overhead, is the total factory overhead cost variance for the period.

Need essay sample on "Accounting Chapter 22 – Performance Evaluation Using Variances from Standard Costs"? We will write a custom essay sample specifically for you for only $ 13.90/page

Can’t wait to take that assignment burden offyour shoulders?

Let us know what it is and we will show you how it can be done!
×
Sorry, but copying text is forbidden on this website. If you need this or any other sample, please register

Already on Businessays? Login here

No, thanks. I prefer suffering on my own
Sorry, but copying text is forbidden on this website. If you need this or any other sample register now and get a free access to all papers, carefully proofread and edited by our experts.
Sign in / Sign up
No, thanks. I prefer suffering on my own
Not quite the topic you need?
We would be happy to write it
Join and witness the magic
Service Open At All Times
|
Complete Buyer Protection
|
Plagiarism-Free Writing

Emily from Businessays

Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/chNgQy

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy