Chapter 11 Multiple Choice Quiz

Chapter 11 Multiple Choice Quiz - 1 INCORRECT Standards...

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1 INCORRECT Standards that do not allow for machine breakdowns or other work interruptions and that require peak efficiency at all times are known as: A) budgeted standards. B) ideal standards. C) normal standards. D) practical standards. Feedback: The correct answer is B (Learning Objective 1): Standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times are known as ideal standards. 2 INCORRECT Taurus Company, a clothing manufacturer, uses a standard costing system. Each unit of a finished product contains 2 yards of cloth. However, there is unavoidable waste of 0.5 yards per unit of finished product that occurs when the cloth is cut for assembly. The cost of the cloth is \$6 per yard. The standard direct material cost for cloth per unit of finished product is: A) \$9.60. B) \$12.00. C) \$14.00. D) \$15.00. Feedback: The correct answer is D (Learning Objective 1): Direct materials requirement = 2 yards + 0.5 yards = 2.5 yards Standard direct material cost = 2.5 yards x \$6 per yard = \$15.00 3 CORRECT Capricorn Company reported a favorable materials price variance and an unfavorable materials quantity variance. Based on these variances, you can conclude that: A) the actual cost per unit of materials was less than the standard cost per unit. B) the actual usage of materials was less than the standard allowed. C) more materials were purchased than were used. D) more materials were used than were purchased. Feedback:

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The correct answer is A (Learning Objective 2): A favorable materials price variance indicates that the actual cost per unit of materials was less that the standard cost per unit of materials (which matches answer (A)). An unfavorable material quantity variance indicates that the actual quantity of materials used was more than the standard quantity of materials allowed for production. (None of the answers above agrees with this statement.) 4 INCORRECT The "standard quantity allowed" is computed by multiplying the: A) actual input in units by the standard output allowed. B) actual output in units by the standard input allowed. C) actual output in units by the standard output allowed. D) standard output in units by the standard input allowed. Feedback: The correct answer is B (Learning Objectives 2 and 3): The standard quantity allowed (or standard hours allowed) refers to the amount of direct materials, direct labor, or variable manufacturing overhead that should have been used to produce the actual output of the period. As such, the standard quantity allowed is calculated by multiplying the actual output in units by the standard input allowed per unit. 5 INCORRECT Aquarius Company employs a standard cost system in which direct materials inventory is carried at standard cost. The company has established the following standard for the materials costs of one unit of product: <a onClick="window.open('/olcweb/cgi/pluginpop.cgi? it=jpg::::/sites/dl/free/0077323580/634790/ch11q05_06.jp
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Chapter 11 Multiple Choice Quiz - 1 INCORRECT Standards...

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