Test Bank for Managerial Accounting, Second Edition
20.Standard cost + price variance + quantity variance = Budgeted cost.21.The overhead controllable variance relates primarily to fixed overhead costs.22.The overhead volume variance relates only to fixed overhead costs.23.If production exceeds normal capacity, the overhead volume variance will be favorable.24.There could be instances where the production department is responsible for a directmaterials price variance.25.The starting point for determining the causes of an unfavorable materials price variance isthe purchasing department.26.A two-variance analysis of overhead consists of a controllable variance and a volumevariance.27.Variance analysis facilitates the principle of "management by exception."*28.A credit to a Materials Quantity Variance account indicates that the actual quantity of direct materials used was greater than the standard quantity of direct materials allowed.*29.A standard cost system may be used with a job order cost system but not a process costsystem.*30.A debit to the Overhead Volume Variance account indicates that the standard hoursallowed for the output produced was greater than the standard hours at normal capacity.
Answers to True-False Statements