Chapter 10-1B
Name_________________________
Acct 202
Select the best answer.
1. 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."
Ans: D
2. Which of the following individuals is least likely to become involved in the setting of either direct material standards or direct labor standards?
A) The purchasing manager.
B) A production supervisor.
C) An engineer.
D) A machine operator.
E) A company's president.
Ans: E
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.
Ans: B
4. Which of the following correctly lists all the information needed to calculate a labor rate variance?
A) Standard labor rate and actual hours worked.
B) Actual hours worked and actual units produced.
C) Standard labor rate, actual labor rate, and actual units produced.
D) Actual labor rate and actual hours worked.
E) Actual labor rate, standard labor rate, and actual hours worked.
Ans: E
5. Which of the following variances are most similar with respect to the manner in which they are calculated?
A) Labor rate variance and labor efficiency variance.
B) Materials price variance and materials quantity variance.
C) Materials price variance, materials quantity variance, and total materials variance.
D) Materials price variance and labor efficiency variance.
E) Materials quantity variance and labor efficiency variance.
Ans: E
6. 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.
Ans: D
7. A production supervisor generally has little influence over the:
A) direct-material quantity variance.
B) direct-labor rate variance.
C) direct-labor efficiency variance.
D) direct-material price variance.
E) number of units produced.
Ans: D
8. Which of the following is not a valid way to adapt standard cost systems to today's manufacturing environment?
A) Emphasize materials and overhead costs.
B) Use more non-traditional cost drivers such as number of setups or number of engineering change orders.
C) Update standards more frequently to adjust for the elimination of non-value-added costs.
D) Use additional nonfinancial measures for performance evaluation and control.
E) Devote more resources to the tracking of direct labor costs.
Ans: E
9. An increasingly popular approach that integrates financial and customer performance measures with measures in the areas of internal operations and innovation is known as:
A) the integrated performance measurement tool (IPMT).
B) the balanced scorecard.
C) gain sharing.
D) cycle efficiency.
E) overall quality assessment (OQA).
Ans: B
10. Justin Company recently purchased materials from a new supplier at a very attractive price. The materials were found to be of poor quality, and the company's laborers struggled significantly as they shaped the materials into finished product. In a desperation move to make up for some of the time lost, the manufacturing supervisor brought in more-senior employees from another part of the plant. Which of the following variances would have a high probability of arising from this situation?
A) Material price variance, favorable.
B) Material quantity variance, unfavorable.
C) Labor rate variance, unfavorable.
D) Labor efficiency variance, unfavorable.
E) All of the above.
Ans: E