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Acctg 202

Choose the best answer. 

1. A standard cost: 
A) is the "true" cost of a unit of production. 
B) is a budget for the production of one unit of a product or service. 
C) can be useful in calculating equivalent units. 
D) is the average cost within an industry. 
E) is the actual cost from previous years. 

2. The term "management by exception" is best defined as: 
A) choosing exceptional managers. 
B) controlling actions of subordinates through acceptance of management techniques. 
C) investigating unfavorable variances. 
D) devoting management time to investigate significant variances. 
E) controlling costs so that non-zero variances are treated as "exceptional." 

3. A perfection standard: 
A) tends to motivate employees over a long period of time. 
B) is attainable in an ideal operating environment. 
C) would make allowances for normal amounts of scrap and waste. 
D) is generally preferred by behavioral scientists. 
E) will result in a number of favorable variances on a performance report. 

4. Most companies base the calculation of the materials price variance on the: 
A) number of units purchased. 
B) number of units spoiled. 
C) number of units that should have been used. 
D) number of units actually used. 
E) number of units to be purchased during the next accounting period. 

5. When considering whether to investigate a variance, managers should consider all of the following except the variance's: 
A) size. 
B) pattern of recurrence. 
C) trends over time. 
D) nature, namely, whether it is favorable or unfavorable. 
E) controllability. 

6. The individual generally responsible for the direct-material price variance is the: 
A) sales manager. 
B) production supervisor. 
C) purchasing manager. 
D) finance manager. 
E) head of the human resources department. 

7. To assess how customers perceive a company's products, management may study: 
A) the number of customer complaints. 
B) the number of warranty claims. 
C) the number of products returned. 
D) the cost of repairing returned products. 
E) all of the above measures. 

8. To improve its manufacturing efficiency, companies should strive toward increasing __________ time as a percentage of processing time + inspection time + waiting time + move time. The blank is: 
A) processing time. 
B) lead time. 
C) waiting time. 
D) move time. 
E) inspection time. 

Use the following facts for questions 9 & 10.

Cost standards for product no. A19:
Direct material:  3 pounds at $2.50 per pound = 


Direct laobr:  5 hours at $7.50                    =


Actual results:

Direct material purchased 25,000 pounds at $2.60 =


Direct material used 23,100 pounds at $2.60 =


Diect labor 40,100 hours at $7.30    =


9. The direct-material price variance is: 
A) $2,000F. 
B) $2,300F. 
C) $2,000U. 
D) $2,500U. 
E) none of the above. 

10. The direct-labor rate variance is: 
A) $7,800F. 
B) $7,950F. 
C) $8,020F. 
D) $8,000U. 
E) none of the above.

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