ACC 220 Chapter 23 – Flashcards
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What is a standard cost?
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The amount management thinks that should be incurred to produce a good or service.
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Which one of the following is not an advantage of a standard costing system?
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It can be used as the price at which to sell a product.
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Labor quantity variances usually result from misallocation of workers.
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False. The labor quantity variance relates to the efficiency of workers, not the misallocation of workers.
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A variance is favorable if actual costs are
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less than standard costs.
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The standard rate of pay is $10 per direct labor hour. If the actual direct labor payroll was $39,200 for 4,000 direct labor hours worked, the direct labor price variance is
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$800 Favorable
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The formula for computing the total overhead variance is
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actual overhead less overhead applied.
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Which statement is correct concerning the costing of inventories at standard cost for external financial statements?
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GAAP allows companies to report cost of goods sold and inventories at standard cost and to disclose the variances separately if the differences between actual and standard costing are immaterial.
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In a standard costing system,
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the Work in Process account is maintained exclusively on the basis of standard costs
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Standards differ from budgets in that:
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budgets are a total amount and standards are a unit amount.
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Standard costs:
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are predetermined unit costs which companies use as measures of performance.
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The advantages of standard costs include all of the following except:
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management must use a static budget.
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Normal standards:
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allow for rest periods, machine breakdowns, and setup time.
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The setting of standards is:
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a management decision.
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In producing product AA, 6,300 pounds of direct materials were used at a cost of $1.10 per pound. The standard was 6,000 pounds at $1.00 per pound. The direct materials quantity variance is:
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$300 unfavorable.
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In producing product ZZ, 14,800 direct labor hours were used at a rate of $8.20 per hour. The standard was 15,000 hours at $8.00 per hour. Based on these data, the direct labor:
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price variance is $2,960 unfavorable.
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Which of the following is correct about the total overhead variance?
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Standard hours allowed for the work done is the measure used in computing the variance.
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Which of the following is incorrect about variance reports?
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They should only be sent to the top level of management.
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In using variance reports to evaluate cost control, management normally looks into:
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(d) both favorable and unfavorable variances that exceed a predetermined quantitative measure such as a percentage or dollar amount.
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Generally accepted accounting principles allow a company to:
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report inventory and cost of goods sold at standard cost as long as there are no significant differences between actual and standard cost.
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Which of the following is incorrect about a standard cost accounting system?
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It reports only favorable variances.
