Variance Analysis and Standard Costing Quiz

What are the three manufacturing costs for which standard costs are used?

• Direct materials, Direct labor, Factory overhead

• Direct materials, Indirect labor, Factory overhead

• Direct materials, Direct labor, Administrative expenses

• Direct materials, Direct labor, Selling expenses

What is the purpose of a standard cost system?

• To determine standard cost, actual cost, and cost variances

• To determine standard cost only

• To determine budgeted cost only

• To determine actual cost only

What is an ideal standard or theoretical standard?

• A standard that can be attained with reasonable effort

• An unrealistic standard that can be achieved only under perfect operating conditions

• A standard that reflects actual operating conditions

• A standard that is continuously reviewed and revised

What is the purpose of comparing actual costs with standard costs?

• To maintain standards in a dynamic manufacturing environment

• To report only the exceptions or variances for cost control

• To report all costs for cost control

• To discourage improvements beyond the standard

What is the formula to calculate direct materials price variance?

• Actual Price x Actual Quantity

• Standard Price (Actual Quantity – Standard Quantity)

• Actual Quantity (Actual Price – Standard Price)

• Standard Quantity (Actual Price – Standard Price)

What is the formula to calculate direct materials quantity variance?

• Standard Quantity (Actual Price – Standard Price)

• Actual Quantity (Actual Price – Standard Price)

• Actual Price x Actual Quantity

• Standard Price (Actual Quantity – Standard Quantity)

What is the formula to calculate direct labor rate variance?

• Actual Hour ( Actual Rate – Standard Rate )

• Standard Rate ( Actual Hour – Standard Hour )

• Actual Hour x Actual Rate

• Standard Rate x Actual Hour

What is the formula to calculate direct labor time variance?

• Actual Hour ( Actual Rate – Standard Rate )

• Standard Rate ( Actual Hour – Standard Hour )

• Actual Hour x Actual Rate

• Standard Rate x Actual Hour

What is the interpretation of an unfavorable fixed factory overhead volume variance?

• The company used its fixed overhead resources more than would be expected under normal operating conditions

• The company used its fixed overhead resources less than would be expected under normal operating conditions

• The company did not use any fixed overhead resources

• The company used its fixed overhead resources exactly as expected under normal operating conditions

What is the purpose of a factory overhead cost variance report?

• To report only the budgeted and actual costs for variable factory overhead

• To report only the budgeted and actual costs for fixed factory overhead

• To report only the budgeted and actual costs for direct labor and materials

• To report budgeted and actual costs for variable and fixed factory overhead along with the related controllable and volume variances