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Chapter 10 Standard Costs and the Balanced Scorecard

Chapter 10 Standard Costs and the Balanced Scorecard -...

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Chapter 10 Standard Costs and the Balanced Scorecard Garrison, Managerial Accounting, 12th Edition 507 True/False Questions 1. A direct material quantity standard generally includes an allowance for waste. Answer: True Level: Easy LO: 1 2. Practical standards allow for normal machine downtime and employee rest periods. Answer: True Level: Easy LO: 1 3. Ideal standards can be used in forecasting and planning whereas practical standards cannot be used for such purposes. Answer: False Level: Easy LO: 1 4. Most companies compute the materials price variance when materials are placed into production. Answer: False Level: Easy LO: 2 5. A materials price variance is favorable if the actual price exceeds the standard price. Answer: False Level: Easy LO: 2 6. An unfavorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period. Answer: False Level: Easy LO: 2 7. An unfavorable labor rate variance can occur if workers with high hourly wage rates are assigned to work on products whose standards assume workers with low hourly wage rates. Answer: True Level: Easy LO: 3 8. If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a favorable labor efficiency variance and unfavorable variable overhead efficiency variance for the same period. Answer: True Level: Medium LO: 4
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