Unit 3: Standard Costing - Practice Quiz

1 What is standard costing?

2 What is a standard cost?

3 Which is a major significance of standard costing?

4 Standard costing is most suitable when production activities are:

5 Who should normally participate in fixing cost standards?

6 A standard based on efficient performance under expected operating conditions is called a:

7 The standard quantity of material is commonly fixed using:

8 Which activity is essential when establishing a standard costing system?

9 Why is a coding system used in standard costing?

10 Standards should be reviewed periodically mainly because:

11 In standard costing, a variance is the difference between:

12 A variance is generally favourable when:

13 What is the main purpose of variance analysis?

14 Material cost variance is calculated as:

15 Which material variance arises because the actual price differs from the standard price?

16 If is actual quantity, is standard price, and is actual price, material price variance is:

17 Which labour variance measures the effect of paying a wage rate different from the standard rate?

18 Labour efficiency variance is mainly caused by a difference between:

19 Overhead costs are commonly classified for variance analysis as:

20 Fixed overhead volume variance arises when:

21 Which statement best describes a standard cost?

22 A company investigates only those cost variances that exceed a predetermined tolerance limit. Which application of standard costing does this illustrate?

23 Each finished unit requires kg of usable material. Normal loss is of material input. What should be the standard input for finished units?

24 A material has a list price of monetary units per kg, a trade discount of , and inward freight of monetary units per kg. What standard material price should be fixed?

25 Management wants challenging standards that can be achieved under efficient operating conditions while allowing normal losses and unavoidable delays. Which type of standard is most suitable?

26 A company is introducing standard costing across several production departments. Which measure is most important for assigning variances to accountable managers?

27 A purchasing department reports a favourable material price variance, but production experiences excessive defects from the cheaper material. How should management interpret the result?

28 For actual output, the standard material quantity is kg at monetary units per kg. Actual consumption is kg at monetary units per kg. What is the material cost variance?

29 A company purchases kg of material. The standard price is monetary units per kg and the actual price is monetary units per kg. What is the material price variance?

30 The standard quantity for actual production is kg, but actual usage is kg. If the standard price is monetary units per kg, what is the material usage variance?

31 A standard mix for kg consists of kg of A at monetary units per kg and kg of B at monetary units per kg. The actual mix is kg of A and kg of B. What is the material mix variance?

32 A standard batch uses kg of input costing monetary units and yields units of output. An actual input of kg produces units. What is the material yield variance?

33 Workers are paid for hours at an actual rate of monetary units per hour. The standard wage rate is monetary units per hour. What is the labour rate variance?

34 Standard hours for actual output are , while actual productive hours are . The standard wage rate is monetary units per hour. What is the labour efficiency variance?

35 Employees were paid for hours, of which hours were idle because of a machine breakdown. The standard wage rate is monetary units per hour. What is the idle time variance?

36 For labour hours, the standard mix is skilled hours at monetary units per hour and semi-skilled hours at monetary units per hour. Actual hours are skilled and semi-skilled. What is the labour mix variance?

37 Standard hours for actual output are , actual hours are , and the standard variable overhead rate is monetary units per hour. Actual variable overhead is monetary units. Which variance combination is correct?

38 Budgeted fixed overhead is monetary units, while actual fixed overhead is monetary units. What is the fixed overhead expenditure variance?

39 Budgeted fixed overhead is monetary units for hours. Standard hours for actual output are . What is the fixed overhead volume variance?

40 Budgeted hours are , actual hours are , and standard hours for actual output are . The standard fixed overhead rate is monetary units per hour. Which statement is correct?

41 A manufacturer reports a favorable material price variance and a larger adverse material usage variance after changing to a cheaper supplier. Which conclusion is most appropriate?

42 Which operating environment is most suitable for using standard costing as a detailed cost-control system?

43 A product has a normal material loss of of input. The standard purchase price is a quoted price of per kg, less a trade discount, plus freight of per kg. What standard material cost should be fixed for producing kg of good output?

44 A batch of good units requires productive labour-hours. Normal idle time is expected to be of paid hours, and the wage rate is per paid hour. What standard direct labour cost per good unit should be fixed?

45 Under an integrated standard costing system, raw material inventory is maintained at standard price and material price variance is recognized when materials are purchased. Which treatment correctly separates price and usage variances?

46 A permanent engineering redesign reduces the material required per unit, while a temporary machine breakdown increases labour time during the current month. How should the standards normally be treated?

47 Standard cost of actual output is , while actual cost is . Recorded variances are material price adverse, material usage favorable, labour rate favorable, labour efficiency adverse, and variable overhead adverse. What fixed overhead variance completes the reconciliation?

48 A production manager uses additional skilled labour, causing an adverse labour rate variance but a larger favorable labour efficiency variance. Which measure best evaluates the combined cost effect while preserving diagnostic information?

49 A company purchases kg of material at per kg against a standard price of and uses kg during the period. If price variance is recognized at purchase, what price variance should be reported?

50 The standard mix for units of output is kg of A at per kg and kg of B at per kg. Actual input for units is kg of A and kg of B. What are the material mix and material yield variances?

51 Standard material for actual output is kg at per kg. Actual consumption is kg at per kg. Which set of variances is correct?

52 The standard input for producing units is kg at per kg, including normal loss. Actual input for the same output is kg. Assuming no price variance, what material usage variance arises?

53 Standard labour is hours per unit at per hour. Actual output is units, and hours were paid at per hour, including idle hours. Which variance combination is correct?

54 A standard labour mix producing units consists of skilled hours at and semi-skilled hours at . For output of units, actual hours are skilled and semi-skilled. What are the labour mix and labour yield variances?

55 Workers are paid for hours. The standard wage rate is per hour. Of these hours, are overtime hours paid at a premium because of avoidable production scheduling delays. What labour rate variance should be reported?

56 A standard labour gang specifies fixed proportions of skilled and unskilled workers. During production, skilled hours are replaced by more unskilled hours, and total hours increase. Which analysis most effectively distinguishes substitution from overall productivity?

57 Variable overhead is absorbed at per direct labour-hour, with a standard of hours per unit. Actual output is units, actual hours are , and actual variable overhead is . What are the variable overhead expenditure and efficiency variances?

58 Budgeted fixed overhead is for hours. Standard hours for actual output are , actual hours are , and actual fixed overhead is . Which variance combination is correct?

59 Budgeted fixed overhead is for days at hours per day. Actual operations cover days, actual hours are , and standard hours for actual output are . What are the calendar, capacity, and efficiency variances?

60 A plant absorbs fixed overhead using normal capacity. Actual production exceeds normal capacity but remains below practical capacity, producing a favorable fixed overhead volume variance. What does this variance primarily indicate?