Cost Accounting Exam Chapters 6-7

1. The process costing system that computes equivalent units on beginning work in process inventory as well as work done in the current period is known as a ___________________________. ANS: weighted average process costing method 2. The number of completed units that could have been produced from the inputs applied is referred to as _______________________. ANS: equivalent units 3. A ______________ costing system is appropriate where products manufactured have different direct materials but similar processing techniques. ANS: hybrid 4. The two components of total material/labor variance are ____________________ and _________________ ANS: price/rate variance; quantity/efficiency variance 5. When multiple materials are used, the effect of substituting a non-standard mix of materials during the production process is referred to as a _____________________ variance. ANS: material mix 6. A primary purpose of using a standard cost system is a. to make things easier for managers in the production facility. b. to provide a distinct measure of cost control. c. to minimize the cost per unit of production. d. b and c are correct. ANS: B DIF: Easy OBJ: 7-1

7. Which of the following statements regarding standard cost systems is true? a. Favorable variances are not necessarily good variances. b. Managers will investigate all variances from standard. c. The production supervisor is generally responsible for material price variances. d. Standard costs cannot be used for planning purposes since costs normally change in the future. ANS: A DIF: Easy OBJ: 7-2

8. A total variance is best defined as the difference between total a. actual cost and total cost applied for the standard output of the period. b. standard cost and total cost applied to production. c. actual cost and total standard cost of the actual input of the period. d. actual cost and total cost applied for the actual output of the period. ANS: D DIF: Easy OBJ: 7-2

9. A company wishing to isolate variances at the point closest to the point of responsibility will determine its material price variance when a. material is purchased. b. material is issued to production. c. material is used in production. d. production is completed. ANS: A DIF: Easy OBJ: 7-3 10. A company would most likely have an unfavorable labor rate variance and a favorable labor efficiency variance if a. the mix of workers used in the production process was more experienced than the normal mix. b. the mix of workers used in the production process was less experienced than the normal mix. c. workers from another part of the plant were used due to an extra heavy production schedule. d. the purchasing agent acquired very high quality material that resulted in less spoilage.