Chapter 10 Standard Costs and the Balanced Scorecard

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

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Unformatted text preview: 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 Chapter 10 Standard Costs and the Balanced Scorecard 508 Garrison, Managerial Accounting, 12th Edition 9. A balanced scorecard contains both customer and internal business process performance measures since improvements in customer satisfaction should result in improvements in internal business processes. Answer: False Level: Medium LO: 5 10. Different companies, having different strategies, should have different balanced scorecards even if they are in the same industry. Answer: True Level: Easy LO: 5 11. A manufacturing cycle efficiency (MCE) ratio of less than 1.00 is desirable since this ratio measures the amount of non-value-added time to throughput time. Answer: False Level: Medium LO: 6 12. A favorable materials quantity variance would appear as a debit in a journal entry. Answer: False Level: Medium LO: 7 Appendix: 10 13. Although formal entry of standard costs and variances into the accounting records is not required, some organizations make such entries in order to emphasize the importance of variances as well as to simplify the bookkeeping process. Answer: True Level: Easy LO: 7 Appendix: 10 14. A standard can be regarded as the budgeted cost for one unit of product. Answer: True Level: Easy LO: 8 15. In using a statistical control chart, observation points plotted between the upper and lower limits are considered to be random or chance occurrences and would not typically result in an investigation....
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This note was uploaded on 01/23/2012 for the course ADMS 2510 taught by Professor Beavis during the Fall '08 term at York University.

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

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