Week 11 (Standard costing)

Question 1

are benchmarks or norms for measuring performance

Answer 1

standards

Question 2

2 types of standards

Answer 2

1. cost standards
2. quantity standards

Question 3

specify how much should be paid for each unit of input

Answer 3

cost standards

Question 4

specify how much of an input should be used to make a product or provide a service

Answer 4

quantity standards

Question 5

is a detailed listing of the standards that should go into making a unit of product

Answer 5

standard cost card

Question 6

the difference between the actual results and standards

Answer 6

variance

Question 7

2 types of variances calculated for each of our manufactured cost

Answer 7

1. price variance
2. quantity variance

Question 8

different between actual price and standard price

Answer 8

price variance

Question 9

difference between actual quantity and standard quantity

Answer 9

quantity variance

Question 10

price and quantity variances are determined separately for two reasons

Answer 10

1. different managers are usually responsible for buying and for using the inputs
2. the buying and using activities occur at different points in time

Question 11

the 6 variances we need to be able to calculate

Answer 11

1. direct materials price variance
2. direct materials quantity variance
3. direct labor rate variance
4. direct labor efficiency variance
5. variable overhead spending variance
6. variable overhead efficiency variance

Question 12

2 direct material variances

Answer 12

1. direct material price variance
2. direct materials quantity variance

Question 13

when actual exceeds the standard resulting in a positive variance

Answer 13

unfavorable variance

Question 14

when actual is less than the standard resulting in a negative variance

Answer 14

favorable variance

Question 15

the AQ in the DM price variance equations represents

Answer 15

the actual quantity of direct materials PURCHASED

Question 16

the AQ in the DM quantity variance equation represents

Answer 16

the actual quantity of direct materials USED IN PRODUCTION

Question 17

measures the difference between what was actually paid to purchase direct materials and what should have been paid, according to standards

Answer 17

DM price variance equation

Question 18

measures the difference between how much in direct materials was actually used in production and how much should have been used, according to the standards

Answer 18

DM quantity variance

Question 19

2 direct labor variances

Answer 19

1. direct labor rate variance
2. direct labor efficiency variance

Question 20

the (AH * AR) component represents

Answer 20

the actual cost of direct labor incurred

Question 21

measures the difference between what was actually paid to the direct laborers and what should have been paid, according to the standards

Answer 21

DL rate variance

Question 22

measures the difference between the amount of direct labor that was actually used to produce goods and how much should have been used, according to the standards

Answer 22

DL efficiency variance

Question 23

2 variable overhead variances

Answer 23

1. variable overhead spending variance
2. variable overhead efficiency variance

Question 24

measures the difference between what was actually spent on variable overhead and what should have been spend, according to the standards

Answer 24

variable overhead sprending variance

Question 25

measures the difference between the actual quantity of the activity (direct labor hours) used and how much should have been used, according to the standards

Answer 25

variable overhead efficiency variance