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Standard Costing (Quiz)

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If you have difficulty answering the following questions, learn more about this topic by reading our Standard Costing (Explanation).


  1. 1. The ingredients included in a manufactured food product are referred to as the
    __________
    direct
    materials.
  2. 2. The wages of employees working on a manufacturer's assembly line are part of the product cost known as
    __________
    direct
    labor.
  3. 3. A manufactured product has three inventoriable costs: direct materials, direct labor, and manufacturing or factory
    __________
    overhead
    .
  4. 4. The term associated with estimated, predetermined costs is
    __________
    standard
    costs.
  5. 5.

    Manufacturers have the cost of their inventories in several general ledger accounts. One of the accounts is Stores. Which of the following inventories would be in the Stores account?

    Materials
    Right!
    Work-in-Process
    Wrong.
    Finished Goods
    Wrong.
  6. 6.

    The supplies used in the manufacturing process would likely be

    Administrative Expense
    Wrong.
    If the question had specified general office supplies, then this answer would be correct. However, the question specified that the supplies were used in the manufacturing process.
    Direct Materials
    Wrong.
    Manufacturing supplies are indirect materials, which are part of manufacturing overhead.
    Manufacturing Overhead
    Right!
    Indirect materials such as manufacturing supplies are part of manufacturing overhead.
  7. 7. The name given to the difference between the actual cost of a product's inputs and the standard cost of one of the product's inputs is known as a
    __________
    Variance
    .
  8. 8.

    The standard cost of direct materials is the cost the manufacturer should have used to make the good output.

    True
    Right!
    False
    Wrong.
  9. 9. The variance that indicates the difference between the amount of direct materials that should have been used to make the good output and the amount of direct materials actually used is the direct materials
    __________
    usage (or quantity or efficiency)
    .
  10. 10.

    Which of the following terms would NOT be considered a price variance in a standard cost system?

    Efficiency
    Right!
    Rate
    Wrong.
    Rate is used interchangeably with price.
    Spending
    Wrong.
    Spending is the price variance associated with variable manufacturing overhead.
  11. 11.

    Which of the following terms would NOT be considered a quantity variance associated with a product's inputs under a standard cost system?

    Efficiency
    Wrong.
    Efficiency is used interchangeably with quantity and usage.
    Price
    Right!
    Usage
    Wrong.
    Usage is used interchangeably with quantity and efficiency.
  12. 12.

    The most advantageous time to recognize a variance in the standard cost of a product's direct material is at the time the material is put into which of the following inventories.

    Direct Materials
    Right!
    Isolating and recording the price variance as soon as possible is viewed as advantageous.
    Work-in-Process
    Wrong.
    This means that the direct materials price variance will not be isolated until the direct materials is used.
    Finished Goods
    Wrong.
  13. 13.

    If a company's amount of good output is less than the amount required to absorb its fixed manufacturing overhead costs, which variance will be unfavorable?

    Budget
    Wrong.
    The budget variance pertains to spending more than the budgeted amount.
    Efficiency
    Wrong.
    Volume
    Right!
  14. 14.

    A company assigns its variable manufacturing overhead to its products on the basis of direct labor hours. The actual direct labor hours exceeded the standard direct labor hours for the products manufactured during the year. Which variable manufacturing overhead variance will disclose the amount of this unfavorable situation?

    Efficiency
    Right!
    Spending
    Wrong.
  15. 15.

    A company applies or assigns its variable manufacturing overhead costs on the basis of machine hours (MH). The variable manufacturing overhead spending variance is the difference between the actual variable manufacturing overhead costs incurred by the company and

    Actual MH X Actual Variable Manufacturing Overhead Rate
    Wrong.
    Actual MH X Standard Variable Manufacturing Overhead Rate
    Right!
    Standard MH X Standard Variable Manufacturing Overhead Rate
    Wrong.
  16. 16.

    A company manufacturers a plastic tray. Its standard cost for the direct materials included in one tray is 2 pounds of material at the standard cost of $3 per pound. The company produced 100 trays and used 210 pounds of material. The material's actual cost was $3.10 per pound. The direct materials usage or quantity variance is

    $21
    Wrong.
    See the calculation for $30.
    $30
    Right!
    The good output was 100 trays. The standard pounds of material per tray are 2 pounds. Therefore, the standard pounds of plastic that should have been used for the good output = 200 pounds. The standard cost of the materials will be $600 (200 std lbs X $3 std cost). The actual pounds used was $210 pounds X $3 std cost = $630. The $30 difference (10 additional lbs. X $3 std cost) is an unfavorable usage or quantity variance.
    $31
    Wrong.
    See the calculation for $30.
    $51
    Wrong.
    See the calculation for $30.
  17. Use the following information in answering Questions 17 - 18:
    During a recent accounting period a company produced 1,000 units of Item Q and 400 units of Item R. The standard direct labor is 4 hours for each unit of Item Q and 6 hours for each unit of Item R. The standard cost for one hour of direct labor is $20 per hour. The actual direct labor for the accounting period was 6,500 hours at $19 per hour.

  18. 17.

    The direct labor efficiency variance for the accounting period was:

    $1,900 Favorable
    Wrong.
    Try another answer.
    $1,900 Unfavorable
    Wrong.
    Try another answer.
    $2,000 Favorable
    Wrong.
    Try another answer.
    $2,000 Unfavorable
    Right!
  19. 18.

    The direct labor rate variance for the accounting period was:

    $6,400 Favorable
    Wrong.
    Try another answer.
    $6,400 Unfavorable
    Wrong.
    Try another answer.
    $6,500 Favorable
    Right!
    $6,500 Unfavorable
    Wrong.
    Try another answer.
  20. Use the following information in answering Questions 19-20:
    The direct materials price variance for the recent accounting period is $8,000 unfavorable. The direct material associated with this variance had a standard cost of $200,000. At the end of the accounting year, the standard cost of the direct material is residing in the following:

  21. 19.

    Assuming that the unfavorable variance of $8,000 is a significant (material) amount for this company, how much of the variance would be charged to the finished goods inventory?

    $0
    Wrong.
    Try another answer.
    $800
    Wrong.
    Try another answer.
    $2,000
    Right!
    Since $50,000 of the $200,000 of standard costs reside in the finished goods inventory, it is reasonable to assign 50/200 or 25% of the variance to the finished goods inventory.
    $4,000
    Wrong.
    Try another answer.
    $8,000
    Wrong.
    Try another answer.
  22. 20.

    Assuming that the unfavorable variance of $8,000 is an insignificant (immaterial) amount for this company, what is the maximum amount of the variance that can be charged to the cost of goods sold?

    $0
    Wrong.
    Try another answer.
    $800
    Wrong.
    Try another answer.
    $2,000
    Wrong.
    Try another answer.
    $4,000
    Wrong.
    Try another answer.
    $8,000
    Right!
    Since the $8,000 unfavorable variance is immaterial in amount, the entire variance may be assigned to the cost of goods sold.

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