Ch 10

Question 0

Standard cost card

Answer 0

Shows standard quantities and costs of inputs required

To produce a unit of specific product

Question 1

Management by exception, significant deviations from standards?

Answer 1

Management system where standards are set for various
Activities, with actual results compared to these standards

Significant deviations from standards are flagged as exceptions

Question 2

Ideal standards, examples 3?

Answer 2

Only attained under best circumstances

Ex. No machine breakdowns, work interruptions,
most skilled and efficient employees giving 100% effort

Question 3

Practical standards, 2 examples?

Answer 3

Standards that are tight but attainable

Ex. Allow for normal machine downtime,
employee rest periods

Question 4

Standard price per unit for direct materials

Answer 4

should reflect final,

delivered cost Of materials

Question 5

Standard quantity per unit for direct materials

Answer 5

should reflect amount of Material required for

each unit of finished product + allowance for unavoidable waste

Question 6

Standard rate per hour for direct labor

Answer 6

Should include hourly wages, employment taxes,

Fringe benefits

Question 7

Standard hours per unit

Answer 7

Standard direct labor time required to complete

A unit of product

Question 8

Standard cost per unit

Answer 8

(Standard quantity allowed of input per unit of output)
X (standard price of input)

= standard cost per unit

Question 9

Quantity variance, how is it stated?

Answer 9

Difference between how much of input was actually used
And how much input should have been used

Stated in dollar terms using standard price of input

Question 10

Price variance

Answer 10

(actual price of input - standard price of input)
X (actual quantity of input purchased)
= price variance

Question 11

Standard quantity allowed AKA Standard hours allowed

Answer 11

Amount of input that should have been used to

Produce actual output of period

Question 12

Materials quantity variance

Answer 12

Measures difference btw quantity of materials used in production
And quantity that should have been used according to standard

Quantity materials used - quantity standard
= materials quantity variance = (AQ X SP) - (SQ X SP)

Question 13

Materials price variance

Answer 13

Difference btw what is paid for given quantity of materials
And what should have been paid according to standard

(actual quantity purchased X actual price)
- (actual quantity purchased X standard price)
= materials price variance = (AQ X AP) - (AQ - SP)

Question 14

Labor efficiency variance

Answer 14

Attempts to measure productivity of direct labor

(actual hours X standard rate)
- (standard hours allowed for actual output X standard rate)
= labor efficiency variance = (AH X SR) - (SH X SR)

Question 15

Labor rate variance

Answer 15

Labor rate variance measures any deviation from standard
In hourly rate paid to direct labor workers

(actual hours X actual rate) - (actual hours X standard rate)
= labor rate variance = (AH X AR) - (AH X SR)

Question 16

Variable overhead efficiency variance

Answer 16

(actual hours X standard rate)
- (standard hours allowed for actual output X standard rate)
= variable overhead efficiency variance = (AH X SR) - (SH X SR)

Question 17

Variable overhead rate variance

Answer 17

(actual hours X actual rate) - (actual hours X standard rate)
= variable overhead rate variance = (AH X AR) - (AH X SR)

Question 18

Denominator activity

Answer 18

Estimated total amount of allocation base in

Formula for predetermined overhead rate

Question 19

Budget variance

Answer 19

Difference btw actual fixed manufacturing overhead
And budgeted fixed manufacturing overhead for period

Budget variance = (Actual fixed overhead)
- (budgeted fixed overhead)

Question 20

Volume variance

Answer 20

(budgeted fixed overhead)
- (fixed overhead applied to work in process)
= volume variance

Fixed overhead applied to work in process
= (denominator hours - standard hours allowed for actual output)