1. The standard cost card contains quantities and costs for _______.

(Points: 1) a)direct
material only b)direct labor only c)direct material and direct labor only d)direct
material, direct labor, and overhead

2. A total variance is best defined as the difference between total _______. (Points: 1)
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

3. The term standard hours allowed measures _______. (Points: 1) a)budgeted output at
actual hours b)budgeted output at standard hours c)actual output at standard hours
d)actual output at actual hours

4. Which of the following factors should not be considered when deciding whether to
investigate a variance? (Points: 1) a) magnitude of the variance b) trend of the variances
over time c)likelihood that an investigation will reduce or eliminate future occurrences of
the variance d)whether the variance is favorable or unfavorable

5. A company wishing to isolate variances at the point closest to the point of

responsibility will determine its material price variance when ______. (Points: 1)
a)material is purchased b)material is issued to production c)material is used in
production d)production is completed

6. The standard predominantly used in Western cultures for motivational purposes is a(n)
____ standard. (Points: 1) a)expected b)annual c)ideal d)practical theoretical

7. Gallagher Corporation. incurred 2,300 direct labor hours to produce 600 units of
product. Each unit should take 4 direct labor hours. Gallagher Corporation applies
variable overhead to production on a direct labor hour basis. The variable overhead
efficiency variance _______. (Points: 1) a)will be unfavorable b)will be favorable c)will
depend upon the capacity measure selected to assign overhead to production d)is
impossible to determine without additional information

8. A variable overhead spending variance is caused by ________. (Points: 1)

a)using more or fewer actual hours than the standard hours allowed for the production
achieved

b)paying a higher/lower average actual overhead price per unit of the activity base than
the standard price allowed per unit of the activity base

c) larger/smaller waste and shrinkage associated with the resources involved than
expected

d) both b and c are causes

9. McCoy Company has the following information available for October when 3,500
units were produced (round answers to the nearest dollar). Standards: Material 3.5 pounds
per unit @ $4.50 per pound Labor 5.0 hours per unit @ $10.25 per hour Actual: Material
purchased 12,300 pounds @ $4.25 Material used 11,750 pounds 17,300 direct labor
hours @ $10.20 per hour What is the labor rate variance? (Points: 1) a)$875 F b)$865 F
c)$865 U d)$875 U

Labor Rate Variance = (AP - SP) * AQ

= ($10.20 - $10.25) *
17,300 hrs.
= $865 F

10. McCoy Company has the following information available for October when 3,500
units were produced (round answers to the nearest dollar). Standards: Material 3.5 pounds
per unit @ $4.50 per pound Labor 5.0 hours per unit @ $10.25 per hour Actual: Material
purchased 12,300 pounds @ $4.25 Material used 11,750 pounds 17,300 direct labor
hours @ $10.20 per hour What is the labor efficiency variance? (Points: 1) a)$2,050 F b)
$2,050 U c)$2,040 U d)$2,040 F

Labor efficiency variance = (AQ - SQ)* SP

=(17,300 hrs -(3,500 units * 5.0 hr/unit))
* $10.25/hr
= $2,050 F

11. Joint costs are useful for _______. (Points: 1) a)setting the selling price of a product
b)determining whether to continue producing an item c)evaluating management by means
of a responsibility d)reporting system determining inventory cost for accounting
purposes

12. Each of the following is a method to allocate joint costs except _______. (Points: 1)
a)relative sales value b)relative net realizable value c)relative weight, volume, or linear
measure d)average unit cost

13. When allocating joint process cost based on tons of output, all products will _______.
(Points: 1) a)be salable at split-off b)have the same joint cost per ton c)have a sales
value greater than their costs d)have no disposal costs at the split-off point

14. Scrap is defined as a _______. (Points: 1) a)finished unit of product that has no sales
value b)residual of the production process that has limited sales value c)residual of
the production process that can be reworked for sale as an irregular unit of product
d)residual of the production process that has no sales value
15. Waste created by a production process is _______. (Points: 1) a)accounted for in the
same manner as defective units b)accounted for as an abnormal loss material c)that can
be sold as an irregular product d)discarded rather than sold

16. In a lumber mill, which of the following would most likely be considered a primary
product? (Points: 1) a)2 x 4 studs b)sawdust c)wood chips d)tree bark

17. Fisher Company produces three products from a joint process. The products can be
sold at split-off or processed further. In deciding whether to sell at split-off or process
further, management should _______. (Points: 1) a)allocate the joint cost to the products
based on relative sales value prior to making the decision b)allocate the joint cost to the
products based on a physical quantity measure prior to making the decision c)subtract the
joint cost from the total sales value of the products before determining relative sales value
and making the decision d)ignore the joint cost in making the decision

18. The split-off point is the point at which _______. (Points: 1) a)output is first
identifiable as individual products d)joint costs are allocated to joint products c)some
products may first be sold d)all of the above

19. A product may be processed beyond the split-off point if management believes that
_______. (Points: 1) a)its marketability will be enhanced b)the incremental cost of further
processing will be less than the incremental revenue of further processing c)the joint cost
assigned to it is not already greater than its prospective selling price d)both a and b

20. Which of the following is a commonly used joint cost allocation method? (Points: 1)
a)high-low method regression analysis b)approximated sales value at split-off method
c)weighted average d)quantity technique