7. The price variance indicates: A. the difference between actual and standard h
ID: 2584982 • Letter: 7
Question
7. The price variance indicates:
A. the difference between actual and standard hourly rate multiplied by the inputs used.
B. the difference between actual and standard unit price multiplied by the inputs used.
C. the difference between actual and standard unit price multiplied by the inputs planned.
D. the difference between actual and standard hourly rate multiplied by the inputs planned.
8)Efficiency variances help management by:
A. providing specific signals that corrective action needs to be taken.
B. enhancing operational controls.
C. providing improved measures of management efficiency.
D. All of the answers are correct.
9)A focus on continuous short-term reductions in manufacturing costs is called:
A. ideal standards
B. target costing
C. variance analysis
D. Kaizen costing
10)The materials usage variance should be calculated:
A. only when there is an unfavorable variance involved.
B. based on material purchased.
C. based on the difference between actual and standard price per unit multiplied by the actual quantity used.
D. based on the amount of materials used in production.
13)A static budget:
A. is valid for only one level of activity.
B. should be compared to standard costs to assess how costs were controlled.
C. is the most effective way to display spending standards.
D. should be compared to a flexible budget to assess how costs were controlled.
14)If variable overhead costs change in proportion to the change in direct labor, the variable overhead efficiency variance would primarily be the responsibility of:
A. the factory foreman.
B. the production manager.
C. the chief executive officer.
D. the human resources manager.
15)An activity-based flexible budget:
A. is the prediction of what activity costs will be as related output changes.
B. may use more than one driver.
C. can be used to reduce cost through the elimination of wasteful activities.
D. All of the answers are correct.
Explanation / Answer
Solution:
7) Correct option is B. the difference between actual and standard unit price multiplied by the inputs used.
The price variance means the different between standard unit price and actual unit price multiplied by the inputs used.
8) the correct option is D. All of the answers are correct.
Efficiency variance is related to the efficiency of labor to perform a work. It shows the ability of labor to do the work. It provides specific signals that corrective action needs to be taken and enhance operational controls with providing improved measures of management efficiency
9) Correct option is D. Kaizen costing
Kaizen costing is the process of continual cost reduction or cost reduction system that is applied to a product in production.
10) The materials usage variance should be calculated: D. based on the amount of materials used in production
Material Efficiency (Usage) Variance measures variance in material cost due to usage/consumption of materials. It is calculated as below:
Material Quantity Variance = Standard Price (Standard Quantity for Actual Production – Actual Quantity USED)
Note --- Here actual quantity means actual quantity of material CONSUMED/USED
Hence the correct option is D. based on the amount of materials used in production
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