A202 - Chapter 10

A202 - Chapter 10 - Chapter 10 Standard Costs and the...

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Chapter 10 Standard Costs and the Balanced Scorecard True/False Questions 1. Ideal standards do not allow for machine breakdowns and other normal inefficiencies. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 2. The standard price per unit for direct materials should reflect the final, delivered cost of the materials, net of any discounts taken. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 3. The standard quantity or standard hours allowed refers to the amount of the input that should have been used to produce the actual output of the period. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 4. In developing a direct material price standard, the expected freight cost on the materials should be included. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 1 Level: Easy 5. Material price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances. Ans: True AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy 6. Waste on the production line will result in a materials price variance. Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium 7. It is best to isolate the material quantity variance when the materials are purchased. Ans: False AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Hard Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-7
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Chapter 10 Standard Costs and the Balanced Scorecard 8. When the material price variance is recorded at the time of purchase, raw materials are recorded as inventory at actual cost. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy 9. If improvement in a performance measure on a balanced scorecard should lead to improvement in another performance measure, but does not, then employees must work harder. Ans: False AACSB: Analytic AICPA BB: Critical Thinking; Resource Management AICPA FN: Reporting LO: 5 Level: Medium 10. A manufacturing cycle efficiency (MCE) of greater than one is impossible. Ans: True AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium 11. Inspection Time is generally considered to be value-added time. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Easy 12. A manager would generally like to see a trend indicating an increase in setup time. Ans: False
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A202 - Chapter 10 - Chapter 10 Standard Costs and the...

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