Chap009 - Chapter 09 - Standard Costs Chapter 09 Standard...

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Unformatted text preview: Chapter 09 - Standard Costs Chapter 09 Standard Costs True / False Questions 1. In standard costing, practical standards can be used to forecast cash flows and to plan inventory, as well as to signal abnormal deviations in costs. True False 2. The standard direct labor rate should not include fringe benefits. True False 3. In standard costing, the standard quantity allowed refers to the output that should have been achieved based on the planned inputs for the period. True False 4. Quantity standards indicate how much of an input should be used for manufacturing a unit of product or in providing a unit of service. True False 5. Ideal standards can only be attained under the best circumstances and allow for no work interruptions. True False 6. Purchase of poor quality materials will generally result in a favorable materials price variance and an unfavorable labor rate variance. True False 9-1 Chapter 09 - Standard Costs 7. From a standpoint of cost control, the most effective time to recognize materials price variances is when the materials are placed into production. True False 8. The materials quantity variance is computed based on the amount of materials purchased during the period. True False 9. The production manager is usually held responsible for the labor efficiency variance. True False 10. The variable overhead efficiency variance measures how efficiently variable overhead resources were used. True False 11. Whoever is responsible for the control of the denominator activity in the predetermined overhead rate should also be responsible for the variable overhead efficiency variance. True False 12. Management by exception means that a manager's attention is directed toward those parts of the organization where things are not proceeding according to plans. True False 13. All cost variances should be considered exceptions that require the attention of management. True False 9-2 Chapter 09 - Standard Costs Multiple Choice Questions 14. The standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times are referred to as: A. normal standards. B. practical standards. C. ideal standards. D. budgeted standards. 15. Which of the following statements concerning practical standards is incorrect? A. Practical standards can be used for product costing and cash budgeting. B. Practical standards can be attained by the average worker. C. When practical standards are used, there is no reason to adjust standards if an old machine is replaced by a newer, faster machine. D. Under practical standards, large variances are less likely than under ideal standards. 16. The general model for calculating a quantity variance is: A. actual quantity of inputs used x (actual price - standard price)....
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Chap009 - Chapter 09 - Standard Costs Chapter 09 Standard...

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