1. Developing standards for input prices and quantities allows for a more detailed understanding of flexible
budget variances.
TRUE
2. Price standards specify amounts and quantity standards specify prices.
FALSE
3. Standard costs are the amount that should be spent to produce a product or service
TRUE
4. Standard costing is used in process industries because it’s more difficult to utilize.
FALSE
5. Both manufacturing and service firms may use standard costing systems.
TRUE
6. The standard cost sheet shows costs needed to make many units of output.
FALSE
7. The unit quantity standards can be used to compute the total amount of inputs allowed for the actual output.
TRUE
8. In computing efficiency variances, managers compute the standard quantity of materials used and the
standard hours allowed.
TRUE
9. All variances accounts are closed out at the end of the year.
TRUE
,10. The total budget variances are categorized into price variances and usage variances.
TRUE
11. Unfavorable variances occur whenever actual prices or usage are less than standard prices or usage, and the
opposite for a favorable variance.
FALSE
12. The direct materials price variance is the difference between actual and standard pricing.
TRUE
13. The direct materials usage variance is the sum of the actual quantities and the standard quantities of units.
FALSE
14. The most detailed method to compute overhead variances is the four-variance method.
TRUE
15. The three-variance method requires dividing costs into fixed and variable amounts.
FALSE
16. The variable overhead efficiency variance measures the change in variable overhead consumption due to
efficient or inefficient use of the activity driver used to assign overhead costs to products.
TRUE
17. In standard costing, overhead is applied to a product by debiting work in process and crediting variable and
fixed overhead control accounts.
TRUE
18. the direct materials mix variance is the difference in the standard cost of actual inputs and the standard costs
of inputs that should have been used.
TRUE
,19. A mix variance is created whenever the actual mix of inputs is equal to the standard mix.
FALSE
20. A yield variance occurs when the actual output is the same as the standard output.
FALSE
21. The condition where everything operates perfectly and demands maximum efficiency is
called __________ .
ideal standards
22. The factors where actual performance differs from planned are called: __________ .
variances
23. __________ standards are the standards used for continuous improvement.
Kaizen
24. The costing that establishes price and quantity standards for inputs is called __________ costing.
standard
25. The document that shows the amount and cost of direct materials, direct labor, and overhead to make a unit
of output is called the standard __________ .
cost sheet
26. The variances that focus on the difference between actual quantity and standard quantity are called
the __________ variances.
usage
27. All variances accounts are __________ at the end of the operating year.
closed
, 28. The sum of the standard plus allowable deviation is called the upper __________ .
control limit
29. A production __________ would most likely be responsible for an unfavorable variable overhead efficiency
variance.
supervisor
30. The __________ variance show the difference between actual output and expected output for a given
amount of input.
yield
31. The following condition which demands maximum efficiency and can be achieved only if everything
operates perfectly is called:
A. Ideal standards
B. Currently attainable standards
C. Budget standards
D. Personnel standards
32. Variances indicate
A. the cause of the variance.
B. who is responsible for the variance.
C. that actual performance is not going according to plan.
D. when the variance should be investigated.
33. The unit standard cost is
A. the product of the standard price times the standard quantity for each unit.
B. the price standard for each unit.
C. the actual cost for a standard product.
D. the amount of actual cost to produce a unit in a standardized process.
34. In setting price standards, the purchasing manager must consider
A. freight.
B. quality.
C. discounts.
D. all of these.
budget variances.
TRUE
2. Price standards specify amounts and quantity standards specify prices.
FALSE
3. Standard costs are the amount that should be spent to produce a product or service
TRUE
4. Standard costing is used in process industries because it’s more difficult to utilize.
FALSE
5. Both manufacturing and service firms may use standard costing systems.
TRUE
6. The standard cost sheet shows costs needed to make many units of output.
FALSE
7. The unit quantity standards can be used to compute the total amount of inputs allowed for the actual output.
TRUE
8. In computing efficiency variances, managers compute the standard quantity of materials used and the
standard hours allowed.
TRUE
9. All variances accounts are closed out at the end of the year.
TRUE
,10. The total budget variances are categorized into price variances and usage variances.
TRUE
11. Unfavorable variances occur whenever actual prices or usage are less than standard prices or usage, and the
opposite for a favorable variance.
FALSE
12. The direct materials price variance is the difference between actual and standard pricing.
TRUE
13. The direct materials usage variance is the sum of the actual quantities and the standard quantities of units.
FALSE
14. The most detailed method to compute overhead variances is the four-variance method.
TRUE
15. The three-variance method requires dividing costs into fixed and variable amounts.
FALSE
16. The variable overhead efficiency variance measures the change in variable overhead consumption due to
efficient or inefficient use of the activity driver used to assign overhead costs to products.
TRUE
17. In standard costing, overhead is applied to a product by debiting work in process and crediting variable and
fixed overhead control accounts.
TRUE
18. the direct materials mix variance is the difference in the standard cost of actual inputs and the standard costs
of inputs that should have been used.
TRUE
,19. A mix variance is created whenever the actual mix of inputs is equal to the standard mix.
FALSE
20. A yield variance occurs when the actual output is the same as the standard output.
FALSE
21. The condition where everything operates perfectly and demands maximum efficiency is
called __________ .
ideal standards
22. The factors where actual performance differs from planned are called: __________ .
variances
23. __________ standards are the standards used for continuous improvement.
Kaizen
24. The costing that establishes price and quantity standards for inputs is called __________ costing.
standard
25. The document that shows the amount and cost of direct materials, direct labor, and overhead to make a unit
of output is called the standard __________ .
cost sheet
26. The variances that focus on the difference between actual quantity and standard quantity are called
the __________ variances.
usage
27. All variances accounts are __________ at the end of the operating year.
closed
, 28. The sum of the standard plus allowable deviation is called the upper __________ .
control limit
29. A production __________ would most likely be responsible for an unfavorable variable overhead efficiency
variance.
supervisor
30. The __________ variance show the difference between actual output and expected output for a given
amount of input.
yield
31. The following condition which demands maximum efficiency and can be achieved only if everything
operates perfectly is called:
A. Ideal standards
B. Currently attainable standards
C. Budget standards
D. Personnel standards
32. Variances indicate
A. the cause of the variance.
B. who is responsible for the variance.
C. that actual performance is not going according to plan.
D. when the variance should be investigated.
33. The unit standard cost is
A. the product of the standard price times the standard quantity for each unit.
B. the price standard for each unit.
C. the actual cost for a standard product.
D. the amount of actual cost to produce a unit in a standardized process.
34. In setting price standards, the purchasing manager must consider
A. freight.
B. quality.
C. discounts.
D. all of these.
