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Standard Costing (Practice Quiz)

Author:
Harold Averkamp, CPA, MBA

For multiple-choice and true/false questions, simply press or click on what you think is the correct answer. For fill-in-the-blank questions, press or click on the blank space provided.

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


1.
The ingredients included in a manufactured food product are referred to as raw materials and as the product's __________ direct materials.
2.
The wages of employees working on a manufacturer's assembly line are part of the product cost known as __________ direct labor.
3.
A manufactured product has three inventoriable costs: direct materials, direct labor, and manufacturing or factory __________ overhead.
4.
The term associated with estimated, predetermined product costs is __________ standard costs.
5.
Manufacturers have the cost of their inventories in several general ledger accounts. One of the accounts is sometimes described as Stores. Which of the following inventories would be in the Stores account?

Materials

Right!

Work-in-Process

Wrong.

Finished Goods

Wrong.
6.
The general supplies used in the manufacturing process would likely to be accounted for as __________

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

True

Right!

False

Wrong.
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) variance.
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.
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.
The most advantageous time to recognize the price variance for a product's direct materials is when the materials are 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.
If the amount of a company's 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.
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.
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.
A company manufactures plastic trays. Its standard cost for the direct material in one tray is 2 pounds 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.

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.

17.
Which of the following is the direct labor efficiency variance for the accounting period?

$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!
18.
Which of the following is the direct labor rate variance for the accounting period?

$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.

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:

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.
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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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

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