QnA MULTIPLE iCHOICE:
1. Which iof ithe ifollowing istatements iconcerning istandard icosts iis ifalse?
a. If iproperly iused, istandards ican ihelp imotivate iemployees.
b. All ivariances, iwhether ifavorable ior iunfavorable, ishould ibe iinvestigated.
c. Standard costs should be attainable under conditions of efficient
ioperation.
d. A istandard i cost i system i may i be i used i with i a i process i costing i system i or i a
job iorder icosting isystem.
2. Standard icosting iis iused ito iisolate ithe ivariances ibetween istandards icosts iand
iactual icosts. iIt iallows imanagement ito imeasure iperformance iand icorrect
iinefficiencies, ithereby ihelping ito
a. Allocate icosts iaccurately.
b. Determine ithe ibreak-even ipoint.
c. Control icosts.
d. Eliminate imanagement’s ineed ifor isubjective idecisions.
3. Both istandard icosts iand ibudgeted icosts iare iused ifor icontrolling icosts. iHowever,
ithe itwo iterms iare inot ithe isame. iStandard icosts idiffer ifrom ibudgeted icosts iin ithe
istandard icosts
a. Are i based i on i the i engineering i studies i while i budgeted i costs i are i historical
costs.
b. Costs i that i were i incurred i for i actual i production, i while i budgeted i costs
i areicosts ithat ishould ihave ibeen iincurred ifor isuch iproduction.
c. Are i costs i that i should i have i been i incurred i for i actual i production,
i while
budgeted i costs i are i costs ithat i should ibe i incurred i for i budgeted i or i planned
iproduction.
d. Are i always i expressed i in i total i amounts, i while i budgeted i costs i are i always
expressed iin iper-unit iamounts.
4. The idifference ibetween iactual icosts iand istandard icost iis icalled
a. Favorable ivariance c. ivariance
b. Unfavorable ivariance d. ivariable
5. Which iof ithe ifollowing istatements iis icorrect?
a. A i standard i costs i system i can i never i be i used i in i both i the i job i order
i andiprocess icosting isystems.
b. Standard i costing i can i be i used i in i job i order i costing, i but i not i in
i process
costing isystem.
c. Standard i costing i can i be i used i in i either i the i job i order i costing i system
i oriprocess icosting isystem.
d. A istandard i cost i system i can i be i used iin i process i costing i system, i but inot iin
job iorder icosting isystem.
,6. In ia iprocess icosting isystem, iequivalent iunits iof iproduction iare icomputed ito
idetermine ithe inumber iof icomplete iunits ithat icould ihave ibeen iproduced, igiven ino
ibeginning iand iending iwork-in-process iinventories. iIf ia icompany iuses istandard
icosting iin iits iprocess icosting isystem, ithe iequivalent iunits iof iproduction
a. Are i multiplied i by i the i standard i cost i per i unit i to i compute i the i total i standard
cost iof iunits iproduced.
b. Are inever iused.
c. Are i converted i to i standard i equivalent i unites i and i then i multiplied i by
i theiactual icost iper iunit.
d. Are iassumed ito ibe izero.
7. A ivariance ishows ia ideviation iof iactual iresults ifrom istandard ior ibudgeted iresults.iIn
ideciding iwhether ito iinvestigate ia ivariance ior inot, imanagement imay iconsider ithe
ifollowing ifactors, iexcept
a. The iamount iof ithe ivariance iand ithe icost iof iinvestigation.
b. Whether ithe ivariance iis ifavorable ior iunfavorable.
c. The ipossibility ithat iinvestigation iwill ieliminate ifuture ioccurrences iof ithe
ivariance.
d. The itrend iof ithe ivariances iover itime.
8. The ifollowing idescribe iideal istandards, iexcept
a. Currently iattainable istandards.
b. Theoretical ior imaximum iefficiency istandards.
c. Make ino iallowances ifor iwaste, imachine idowntime, iand ispoilage.
d. Perfection istandards.
9. Which iof ithe ifollowing idoes inot idescribe ipractical istandards?
a. Currently iattainable istandards.
b. Can ibe iused ifor iproduct icosting iand icash ibudgeting.
c. Performance i that i is i reasonably i expected i to i be i achieved i with i an
iallowance ifor inormal ispoilage, iwaste, iand idowntime.
d. Negate ithe ineed ito iadjust istandards iif iworking iconditions ichange
10. A istandard icost iis ian iestimate iof iwhat ia icost ishould ibe iunder inormal ioperation
iconditions. iIn iestablishing istandard icosts, ithe ifollowing iorganizational ipersonnel
imay ibe iinvolved, iexcept
a. Top imanagement c. iquality icontrol ipersonnel
b. Budgetary iaccountants d. iindustrial iengineers.
11. Because iof ithe iimpact iof ifixed icosts iin imost ibusinesses, istandard icosting isystem
iis iusually inot ieffective iunless ithe icompany ialso ihas ia iflexible ibudgeting isystem. iIn
iflexible ibudgeting,
a. Standard icosts iare iused ito iprepare ibudgets ifor imultiple iactivity ilevels.
b. Standard icosts iare inever iused.
, c. Variable icosts iand ifixed icosts ishow ithe isame ibehavior ias ibudgets ifor
idifferent iactivity ilevels iare iprepared.
d. A i budget i for i the i expected i activity i level i is i prepare i showing i variable i and
fixed icosts iseparately.
12. In ia istandard icosting isystem, iactual icosts iare icompared iwith istandard icosts. iThe
idifference ior ivariance iis idetermined, iand iresponsibility ifor isuch ivariance iis
iassigned ior iidentified ito ia iparticular iperson ior idepartment, iin iorder ito
a. Determine iwho iis iat ifault iand irender ithe iappropriate ipunishment.
b. Be iable ito iset ithe icorrect iselling iprice iof ithe iproduct.
c. Use ithe iknowledge iabout ithe ivariances ito ipromote ilearning iand icontinuous
iimprovement iin ithe imanufacturing ioperations.
d. Trace i the i variances i to i the i proper i inventory i accounts i so i that i they imay ibe
valued iat iactual icosts.
13. This imanagement ipractice iinvolves igiving isignificant iattention ionly ito i thoseiareas
iin iwhich imaterial ivariances ifrom iexpectations ioccur, ithat iis, igiving iless iattention
ion iareas ioperation ias iexpected.
a. Responsibility iAccounting c. imanagement iby iexception
b. Management iby iobjectives d. imaterials icontrol
14. The imaterials iefficiency ivariance iis ithe idifference ibetween iactual iand istandard
iquantities iused iin iproduction, imultiplied iby ithe istandard iprice. iThis ivariance imay
ibe ithe iresponsibility iof
a. Purchasing idepartment c. iproduction idepartment
b. Sales idepartment d. ipersonnel idepartment
15. An iunfavorable imaterials ispending ivariance icoupled iwith ia ifavorable imaterials
iefficiency ivariance iwould imost ilikely iresult ifrom
a. The ipurchase iand iuse iof ilower ithan istandard iquality imaterials
b. The ipurchase iand iuse iof ihigher ithan istandard iquality imaterials
c. Problems iinvolving imachine iefficiency
d. Changes iin iproduct imix
16. For ia irecent imonth, ithe iaccountant’s istandard icost ivariance ianalysis ireport
ishowed ia isignificant iamount iof iunfavorable imaterials iefficiency i(quantity ioriusage)
ivariance ithat iwarrants iand iinvestigation. iThe iinvestigation iof i this ivariance
ishould ibegin iwith ithe
a. Personnel imanager
b. Purchasing imanager ionly
c. Production imanager ionly.
d. Production imanager ior ipurchasing imanager
17. In i two-way i variance i analysis, i materials, i labor, i and i variable i overhead i variances
imay ibe ibroken idown iinto
a. Price ivariance iand ispending ivariance
b. Quantity ior itime ivariance iand iefficiency ivariance
c. Spending ivariance iand iefficiency ivariance
d. Spending ivariance iand ivolume ior icapacity ivariance
, 18. The idifference ibetween ithe iactual itime iused iand ithe iamount iof itime ithat ishould
ihave ibeen iused ifor iactual iproduction, imultiplied iby ithe istandard ilabor irate iper
itime iis icalled
a. Efficiency ivariance
b. Price ivariance
c. Spending ivariance
d. Rate ivariance
19. The idifference ibetween ithe iactual iprice ior irate ipaid iand ithe istandard iprice ior irate
ithat ishould ihave ibeen ipaid, imultiplied iby ithe iactual iquantity ior iactual itime iisicalled
a. Efficiency ivariance
b. Quantity ivariance
c. Time ivariance
d. Spending ivariance
ITEMS i20 iTO i25 iARE iBASED iON iTHE iFOLLOWING iINFORMATION:
A icompany iproduces ia iproduct iwith ithe ifollowing istandard icosts:
Materials, i2 ipieces i@ iP5 iper ipiece
i P10
Labor i4 ihours i@ iP8 iper ihour 32
Variable iOverhead i4 ihours i@ iP6 iper ihour 24
Fixed ioverhead* i4 ihours i@ iP4 iper ihour 16
Total iStandard imanufacturing icost iper iunit P82
*based ion icapacity ilevel iof i5,000 iunits
20. If ia iflexible ibudget ifor i4,500 iunits, i5,000 iunits, iand i5,500 iunits iis iprepared ifor ia
icertain imonth, ithe ibudgeted icosts iare
4,500units 5,000units 5,500units
a. i 369,000 410,000 451,000
b. i 297,000 330,000 363,000
c. i 377,000 410,000 443,000
d. i 0 410,000 0
21.iAssume i that i X is i the of i units i to i be i produced i and i TBC i is i the
i number i total
budgeted icost, ithe iflexible ibudget iformula ithat ithe icompany imay iuse ito icompute
itotal ibudgeted icost ifor iany ivalue iof iX iwithin ithe irelevant irange iis
a. TBC i= i82x
b. TBC i= i66x
c. i TBC i= i80,000
d. i TBC i= i66x i+ i80,000
1. Which iof ithe ifollowing istatements iconcerning istandard icosts iis ifalse?
a. If iproperly iused, istandards ican ihelp imotivate iemployees.
b. All ivariances, iwhether ifavorable ior iunfavorable, ishould ibe iinvestigated.
c. Standard costs should be attainable under conditions of efficient
ioperation.
d. A istandard i cost i system i may i be i used i with i a i process i costing i system i or i a
job iorder icosting isystem.
2. Standard icosting iis iused ito iisolate ithe ivariances ibetween istandards icosts iand
iactual icosts. iIt iallows imanagement ito imeasure iperformance iand icorrect
iinefficiencies, ithereby ihelping ito
a. Allocate icosts iaccurately.
b. Determine ithe ibreak-even ipoint.
c. Control icosts.
d. Eliminate imanagement’s ineed ifor isubjective idecisions.
3. Both istandard icosts iand ibudgeted icosts iare iused ifor icontrolling icosts. iHowever,
ithe itwo iterms iare inot ithe isame. iStandard icosts idiffer ifrom ibudgeted icosts iin ithe
istandard icosts
a. Are i based i on i the i engineering i studies i while i budgeted i costs i are i historical
costs.
b. Costs i that i were i incurred i for i actual i production, i while i budgeted i costs
i areicosts ithat ishould ihave ibeen iincurred ifor isuch iproduction.
c. Are i costs i that i should i have i been i incurred i for i actual i production,
i while
budgeted i costs i are i costs ithat i should ibe i incurred i for i budgeted i or i planned
iproduction.
d. Are i always i expressed i in i total i amounts, i while i budgeted i costs i are i always
expressed iin iper-unit iamounts.
4. The idifference ibetween iactual icosts iand istandard icost iis icalled
a. Favorable ivariance c. ivariance
b. Unfavorable ivariance d. ivariable
5. Which iof ithe ifollowing istatements iis icorrect?
a. A i standard i costs i system i can i never i be i used i in i both i the i job i order
i andiprocess icosting isystems.
b. Standard i costing i can i be i used i in i job i order i costing, i but i not i in
i process
costing isystem.
c. Standard i costing i can i be i used i in i either i the i job i order i costing i system
i oriprocess icosting isystem.
d. A istandard i cost i system i can i be i used iin i process i costing i system, i but inot iin
job iorder icosting isystem.
,6. In ia iprocess icosting isystem, iequivalent iunits iof iproduction iare icomputed ito
idetermine ithe inumber iof icomplete iunits ithat icould ihave ibeen iproduced, igiven ino
ibeginning iand iending iwork-in-process iinventories. iIf ia icompany iuses istandard
icosting iin iits iprocess icosting isystem, ithe iequivalent iunits iof iproduction
a. Are i multiplied i by i the i standard i cost i per i unit i to i compute i the i total i standard
cost iof iunits iproduced.
b. Are inever iused.
c. Are i converted i to i standard i equivalent i unites i and i then i multiplied i by
i theiactual icost iper iunit.
d. Are iassumed ito ibe izero.
7. A ivariance ishows ia ideviation iof iactual iresults ifrom istandard ior ibudgeted iresults.iIn
ideciding iwhether ito iinvestigate ia ivariance ior inot, imanagement imay iconsider ithe
ifollowing ifactors, iexcept
a. The iamount iof ithe ivariance iand ithe icost iof iinvestigation.
b. Whether ithe ivariance iis ifavorable ior iunfavorable.
c. The ipossibility ithat iinvestigation iwill ieliminate ifuture ioccurrences iof ithe
ivariance.
d. The itrend iof ithe ivariances iover itime.
8. The ifollowing idescribe iideal istandards, iexcept
a. Currently iattainable istandards.
b. Theoretical ior imaximum iefficiency istandards.
c. Make ino iallowances ifor iwaste, imachine idowntime, iand ispoilage.
d. Perfection istandards.
9. Which iof ithe ifollowing idoes inot idescribe ipractical istandards?
a. Currently iattainable istandards.
b. Can ibe iused ifor iproduct icosting iand icash ibudgeting.
c. Performance i that i is i reasonably i expected i to i be i achieved i with i an
iallowance ifor inormal ispoilage, iwaste, iand idowntime.
d. Negate ithe ineed ito iadjust istandards iif iworking iconditions ichange
10. A istandard icost iis ian iestimate iof iwhat ia icost ishould ibe iunder inormal ioperation
iconditions. iIn iestablishing istandard icosts, ithe ifollowing iorganizational ipersonnel
imay ibe iinvolved, iexcept
a. Top imanagement c. iquality icontrol ipersonnel
b. Budgetary iaccountants d. iindustrial iengineers.
11. Because iof ithe iimpact iof ifixed icosts iin imost ibusinesses, istandard icosting isystem
iis iusually inot ieffective iunless ithe icompany ialso ihas ia iflexible ibudgeting isystem. iIn
iflexible ibudgeting,
a. Standard icosts iare iused ito iprepare ibudgets ifor imultiple iactivity ilevels.
b. Standard icosts iare inever iused.
, c. Variable icosts iand ifixed icosts ishow ithe isame ibehavior ias ibudgets ifor
idifferent iactivity ilevels iare iprepared.
d. A i budget i for i the i expected i activity i level i is i prepare i showing i variable i and
fixed icosts iseparately.
12. In ia istandard icosting isystem, iactual icosts iare icompared iwith istandard icosts. iThe
idifference ior ivariance iis idetermined, iand iresponsibility ifor isuch ivariance iis
iassigned ior iidentified ito ia iparticular iperson ior idepartment, iin iorder ito
a. Determine iwho iis iat ifault iand irender ithe iappropriate ipunishment.
b. Be iable ito iset ithe icorrect iselling iprice iof ithe iproduct.
c. Use ithe iknowledge iabout ithe ivariances ito ipromote ilearning iand icontinuous
iimprovement iin ithe imanufacturing ioperations.
d. Trace i the i variances i to i the i proper i inventory i accounts i so i that i they imay ibe
valued iat iactual icosts.
13. This imanagement ipractice iinvolves igiving isignificant iattention ionly ito i thoseiareas
iin iwhich imaterial ivariances ifrom iexpectations ioccur, ithat iis, igiving iless iattention
ion iareas ioperation ias iexpected.
a. Responsibility iAccounting c. imanagement iby iexception
b. Management iby iobjectives d. imaterials icontrol
14. The imaterials iefficiency ivariance iis ithe idifference ibetween iactual iand istandard
iquantities iused iin iproduction, imultiplied iby ithe istandard iprice. iThis ivariance imay
ibe ithe iresponsibility iof
a. Purchasing idepartment c. iproduction idepartment
b. Sales idepartment d. ipersonnel idepartment
15. An iunfavorable imaterials ispending ivariance icoupled iwith ia ifavorable imaterials
iefficiency ivariance iwould imost ilikely iresult ifrom
a. The ipurchase iand iuse iof ilower ithan istandard iquality imaterials
b. The ipurchase iand iuse iof ihigher ithan istandard iquality imaterials
c. Problems iinvolving imachine iefficiency
d. Changes iin iproduct imix
16. For ia irecent imonth, ithe iaccountant’s istandard icost ivariance ianalysis ireport
ishowed ia isignificant iamount iof iunfavorable imaterials iefficiency i(quantity ioriusage)
ivariance ithat iwarrants iand iinvestigation. iThe iinvestigation iof i this ivariance
ishould ibegin iwith ithe
a. Personnel imanager
b. Purchasing imanager ionly
c. Production imanager ionly.
d. Production imanager ior ipurchasing imanager
17. In i two-way i variance i analysis, i materials, i labor, i and i variable i overhead i variances
imay ibe ibroken idown iinto
a. Price ivariance iand ispending ivariance
b. Quantity ior itime ivariance iand iefficiency ivariance
c. Spending ivariance iand iefficiency ivariance
d. Spending ivariance iand ivolume ior icapacity ivariance
, 18. The idifference ibetween ithe iactual itime iused iand ithe iamount iof itime ithat ishould
ihave ibeen iused ifor iactual iproduction, imultiplied iby ithe istandard ilabor irate iper
itime iis icalled
a. Efficiency ivariance
b. Price ivariance
c. Spending ivariance
d. Rate ivariance
19. The idifference ibetween ithe iactual iprice ior irate ipaid iand ithe istandard iprice ior irate
ithat ishould ihave ibeen ipaid, imultiplied iby ithe iactual iquantity ior iactual itime iisicalled
a. Efficiency ivariance
b. Quantity ivariance
c. Time ivariance
d. Spending ivariance
ITEMS i20 iTO i25 iARE iBASED iON iTHE iFOLLOWING iINFORMATION:
A icompany iproduces ia iproduct iwith ithe ifollowing istandard icosts:
Materials, i2 ipieces i@ iP5 iper ipiece
i P10
Labor i4 ihours i@ iP8 iper ihour 32
Variable iOverhead i4 ihours i@ iP6 iper ihour 24
Fixed ioverhead* i4 ihours i@ iP4 iper ihour 16
Total iStandard imanufacturing icost iper iunit P82
*based ion icapacity ilevel iof i5,000 iunits
20. If ia iflexible ibudget ifor i4,500 iunits, i5,000 iunits, iand i5,500 iunits iis iprepared ifor ia
icertain imonth, ithe ibudgeted icosts iare
4,500units 5,000units 5,500units
a. i 369,000 410,000 451,000
b. i 297,000 330,000 363,000
c. i 377,000 410,000 443,000
d. i 0 410,000 0
21.iAssume i that i X is i the of i units i to i be i produced i and i TBC i is i the
i number i total
budgeted icost, ithe iflexible ibudget iformula ithat ithe icompany imay iuse ito icompute
itotal ibudgeted icost ifor iany ivalue iof iX iwithin ithe irelevant irange iis
a. TBC i= i82x
b. TBC i= i66x
c. i TBC i= i80,000
d. i TBC i= i66x i+ i80,000
