WorksheetsMA Ch-15 to 16
Total questions: 40
Worksheet time: 2hrs 35mins
What is an attainable standard?
A standard which includes no allowance for losses, waste and inefficiencies. It represents the level of performance which is attainable under perfect operating conditions
A standard which includes some allowance for losses, waste and inefficiencies. It represents the level of performance which is attainable under efficient operating conditions
A standard which is based on currently attainable operating conditions
A standard which is kept unchanged, to show the trend in costs
A company is in the process of setting standard unit costs for next period. Product J uses two types of material, P and S. 7 kg of material P and 3 kg of material S are needed, at a standard price of $4 per kg and $9 per kg respectively.
Direct labour will cost $7 per hour and each unit of J requires 5 hours of labour
Production overheads are to be recovered at the rate of $6 per direct labour hour, and general overhead is to be absorbed at a rate of ten per cent of production cost.
What is the standard prime cost for one unit of product J?
$90
$80
$70
$60
Which of the following statements is correct?
The operating standards set for production should be the most ideal possible
he operating standards set for production should be the minimal level
The operating standards set for production should be the attainable level
The operating standards set for production should be the maximum level
A company manufactures a carbonated drink, which is sold in 1 litre bottles. During the bottling process there is a 20% loss of liquid input due to spillage and evaporation. What is the standard usage of liquid per bottle (to two decimal places)?
1.25 liters
1.23 liters
1.22 liters
1.21 liters
Which of the following best describes management by exception?
Using management reports to highlight exceptionally good performance, so that favourable results can be built upon to improve future outcomes
Sending management reports only to those managers who are able to act on the information contained within the reports
Focusing management reports on areas which require attention and ignoring those which appear to be performing within acceptable limits
Focusing management reports on areas which are performing just outside acceptable limits
Standard costing provides which of the following?
(i) Targets and measures of performance
(ii) Information for budgeting
(iii) Simplification of inventory control systems
(iv) Actual future costs
(i), (ii) and (iii) only
(ii), (iii) and (iv) only
(i), (iii) and (iv) only
(i), (ii) and (iv) only
A unit of product L requires 9 active labour hours for completion. The performance standard for product L allows for ten per cent of total labour time to be idle, due to machine downtime. The standard wage rate is $9 per hour.
What is the standard labour cost per unit of product L?
$90.00
$80.00
$70.00
$60.00
A company manufactures a single product L, for which the standard material cost is as follows.
Material 14 kg * $3 $ per unit
42
During July, 800 units of L were manufactured, 12,000 kg of material were purchased for $33,600, of which 11,500 kg were issued to production. SM Co values all inventory at standard cost.
What are the material price and usage variances for July?
price $2,300 (F) usage $900 (A)
price $2,300 (F) usage $300 (A)
price $2,400 (F) usage $900 (A)
price $2,400 (F) usage $840 (A)
A company expected to produce 200 units of its product, the Bone, in 20X3. In fact 260 units were produced. The standard labour cost per unit was $70 (10 hours at a rate of $7 per hour). The actual labour cost was $18,600 and the labour force worked 2,200 hours although they were paid for 2,300 hours.
What is the direct labour rate variance for the company in 20X3?
$400 (A)
$2,500 (F)
$2,500 (A)
$3,200 (A)
A company expected to produce 200 units of its product, the Bone, in 20X3. In fact 260 units were produced. The standard labour cost per unit was $70 (10 hours at a rate of $7 per hour). The actual labour cost was $18,600 and the labour force worked 2,200 hours although they were paid for 2,300 hours
What is the direct labour efficiency variance for the company in 20X3?
$400 (A)
$2,100 (F)
$2,800 (A)
$2,800 (F)
Extracts from a company's records from last period are as follows
What are the variable production overhead variances for last period?
Expenditure Efficiency
$1,656 (F) $2,070 (A)
$1,656 (F) $3,726 (A)
$1,656 (F) $4,140 (A)
$3,354 (A) $4,140 (A)
A company has budgeted to make and sell 4,200 units of product X during the period.
The standard fixed overhead cost per unit is $4.
During the period covered by the budget, the actual results were as follows.
Production and sales 5,000 units
Fixed overhead incurred $17,500
What are the fixed overhead variances for the period?
Fixed overhead expenditure variance fixed overhead volume variance
$700 (F) $3,200 (F)
$700 (F) $3,200 (A)
$700 (A) $3,200 (F)
$700 (A) $3,200 (A)
A company manufactures a single product, and relevant data for December is as follows
What are the fixed production overhead capacity and efficiency variances for December?
Capacity - $1,600 (F)
Efficiency - $400 (F)
Capacity - $1,600 (A)
Efficiency - $400 (A)
Capacity - $1,600 (A)
Efficiency - $400 (F)
Capacity -$1,600 (F)
Efficiency - $400 (A)
Which of the following would help to explain a favourable direct labour efficiency variance?
(i) Employees were of a lower skill level than specified in the standard
(ii) Better quality material was easier to process
(iii) Suggestions for improved working methods were implemented during the period
(i), (ii) and (iii)
(i) and (ii) only
(ii) and (iii) only
(i) and (iii) only
Which of the following statements is correct?
An adverse direct material cost variance will always be a combination of an adverse material price variance and an adverse material usage variance
An adverse direct material cost variance will always be a combination of an adverse material price variance and a favourable material usage variance
An adverse direct material cost variance can be a combination of a favourable material price variance and a favourable material usage variance
An adverse direct material cost variance can be a combination of a favourable material price variance and an adverse material usage variance
A company has a budgeted material cost of $125,000 for the production of 25,000 units per month. Each unit is budgeted to use 2 kg of material. The standard cost of material is $2.50 per kg.
Actual materials in the month cost $136,000 for 27,000 units and 53,000 kg were purchased and used
What was the adverse material price variance ?
3500$
3400$
3300$
3200$
A company has a budgeted material cost of $125,000 for the production of 25,000 units per month. Each unit is budgeted to use 2 kg of material. The standard cost of material is $2.50 per kg.
Actual materials in the month cost $136,000 for 27,000 units and 53,000 kg were purchased and used.
What was the favorable material usage variance?
2200$
2500$
2400$
2300$
The following information relates to labour costs for the past month:
What were the labor rate and efficiency variances?
Rate variance Efficiency variance
$26,000 Adverse $25,000 Favourable
$26,000 Adverse $10,000 Favourable
$36,000 Adverse $2,500 Favourable
$36,000 Adverse $25,000 Favourable
A manufacturing company operates a standard absorption costing system. Last month 25,000 production hours were budgeted and the budgeted fixed production overhead cost was $125,000. Last month the actual hours worked were 24,000 and the standard hours for actual production were 27,000.
What was the fixed production overhead capacity variance for last month?
$5,000 Adverse
$5,000 Favourable
$10,000 Adverse
$10,000 Favourable
What was the total direct materials variance?
Nil
$10,000 Adverse
$10,000 Favourable
$11,000 Adverse
All of the following, except one, are sound principles for devising objectives in order to enact the corporate mission.
Which is the exception?
They should be observable or measurable
They should be easily achievable
They should relate to a specified time period
They should be specific
In order for a business's strength to have a real benefit, it has to be linked to critical success factors. What are critical success factors?
Factors contributing to reduced costs
Factors necessary to match strengths to opportunities
Factors necessary to build on strengths
Factors fundamental to strategic success
In general terms, which of the following elements should organisations include in their mission statements?
(i) Policies and standards of behaviour
(ii) Values – a description of the culture, assumptions and beliefs regarded as important to those managing the business
(iii) Profitability
(iv) Strategy – the commercial logic for the business, defining the nature of the business
(i) and (ii) only
(ii) and (iv) only
(i), (ii) and (iv) only
(iii) and (iv) only
Which of the following short-term objectives may involve the sacrifice of longer-term objectives?
(i) Reducing training costs
(ii) Increasing quality control
(iii) Increasing capital expenditure projects
(i) only
(i), (ii) and (iii)
(ii) and (iii) only
(i) and (ii) only
What is short-termism?
It is when non-financial performance indicators are used for measurement
It is when organisations sacrifice short term objectives
It is when there is a bias towards short term rather than long term performance
It is when managers' performance is measured on long term results
Market conditions and economic conditions can impact on performance measurement. Which of the following statements are true?
(i) The entry of a new competitor in the market will cause a business to examine sales performance measures more closely
(ii) General economic conditions can raise or lower overall demand and supply
(i) and (ii) are true
(i) and (ii) are false
(i) is true and (ii) is false
(i) is false and (ii) is true
Which of the following BEST explains the relationship between mission statements and performance measurement.
Mission statements are a marketing tool and have no part to play in performance measurement
To be of value, a performance measure must have an obvious link to the mission statement
Performance measurement involves comparing actual performance against a target and the mission statement represents the organisation's overall target
Mission statements include detailed performance standards that actual performance can be measured against
Which of the following describes the role of tactical objectives?
'Middle tier' objectives to facilitate the planning and control of individual functions within the organisation
Day-to-day performance targets related to the organisation's operations
A clear vision of the organisation's reason for existing
Long-term objectives for the organisation as a whole
A company sells new, high quality motor vehicles in many countries around the world. Half way through the company's current financial year, the global economy unexpectedly goes in to recession.
What impact would the unexpected recession have on performance measurement relating to sales and revenue?
The impact of a recession on the sales of new, high quality motor vehicles cannot be predicted
Sales and revenue are likely to decrease in the second half of the year and performance should be measured in that context
No impact as a recession is unlikely to impact the sales and revenue of motor vehicles
Sales and revenue are likely to increase in the second half of the year and performance should be measured in that context
Which of the following describes the role of strategic objectives?
'Middle tier' objectives to facilitate the planning and control of individual functions within the organisation
Day-to-day performance targets related to the organisation's operations
A clear vision of the organisation's reason for existing
Long-term objectives for the organisation as a whole
The following statements relate to benchmarking.
Which TWO statements are true?
1.A danger of benchmarking is that inappropriate comparisons lead to incorrect conclusions
2.Benchmarking must involve competitors to be effective
3.The ultimate aim of benchmarking is to improve performance
4. Benchmarking is essentially a cost cutting exercise
1,4
1,3
1,2
3,4
A financial services company benchmarks the performance of its IT department with that of a leading IT outsource company.
What type of benchmarking is the company using?
Strategic
Competitive
Functional
Internal
Company A manufactures mobile phones. Staff employed within the Research & Development function at Company A have purchased a mobile phone manufactured by Company B for the purpose of reverse engineering.
What type of benchmarking is Company A using?
Strategic
Competitive
Functional
Internal
Which of the following are suitable measures of performance at the strategic level?
(i) Machine idle time
(ii) Employee sick days
(iii) Return on capital employed
(i) and (ii)
(ii) only
(ii) and (iii)
(iii) only
What is 'short-termism'?
A legitimate focus on short-term results
A belief that senior management have a duty to maximise profit
Prioritising short-term results above the organisation's long-term prospects
A management philosophy linked to TQM
Which of the following performance indicators is a financial performance measure?
Quality rating
Number of customer complaints
Cash flow
System (machine) down time
What is the value of the acid test ratio?
0.6875
0.7093
1.2708
2.000
A company has current assets of $1.8m, including inventory of $0.5m, and current liabilities of $1.0m.
What would be the effect on the value of the current and acid test ratios if the company bought more raw material inventory on three months' credit?
Current ratio Acid test
1.increase increase
2. decrease decrease
3. increase decrease
4. decrease increase
2
1
3
4
An investment center earns a return on investment of 18% and a residual income of $300,000. The cost of capital is 15%. A new project offers a return on capital employed of 17%.
If the new project were adopted, what would happen to the investment center's return on investment and residual income?
Return on investment Residual income
1. increase decrease
2. increase increase
3. decrease decrease
4.decrease increase
1
2
3
4
An extract from a company's financial results for 20X6 are shown below.
What is the gross profit percentage for 20X6, to one decimal place?
62.9%
63.9%
61.7%
61.6%
