Testbank Standard Costing: True/False Questions on Standard

TEST 1TRUE/FALSEWrite TRUE if the statement is correct and FALSE if it is wrong. Avoid ERASURES. T 1.Specifications for materials are compiled on a bill of materials. T 2.An operations flow document shows all processes necessary to manufacture one unit of a product. F 3.A standard cost card is prepared before developing manufacturing standardsfor direct materials, direct labor, and factory overhead. F 4.The total variance can provide useful information about the source of cost differences. F 5.The formula for price/rate variance is (AP - SP) x SQ F 6.The price variance reflects the difference between the quantity of inputs used and the standard quantity allowed for the output of a period. F 7.The usage variance reflects the difference between the price paid for inputs and the standard price for those inputs. T 8.The formula for usage variance is (AQ - SQ) * SP T 9.The point of purchase model calculates the materials price variance using the quantity of materials purchased. T 10.The difference between the actual wages paid to employees and the standard wages for all hours worked is the labor rate variance. F 11.The difference between the standard hours worked for a specific level of production and the actual hours worked is the labor rate variance. T 12.A flexible budget is an effective tool for budgeting factory overhead. T 23.The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the variable overhead spending variance. F 24.The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the variable overhead efficiency variance. T 25.The difference between budgeted variable overhead for actual hours and standard overhead is the variable overhead efficiency variance. F 26.The difference between budgeted variable overhead for actual hours and standard overhead is the variable overhead spending variance. T 27.The difference between actual and budgeted fixed factory overhead is referred to as a fixed overhead spending variance. F 28.The difference between actual and budgeted fixed factory overhead is referred to as a fixed overhead volume variance. T 29.The difference between budgeted and applied fixed factory overhead is referred to as a fixed overhead volume variance. F 30.A fixed overhead volume variance is a controllable variance. T 31.A fixed overhead volume variance is a noncontrollable variance. T 32.A one-variance approach calculates only a total overhead variance T 33.A budget variance is a controllable variance. T 34.An overhead efficiency variance is related entirely to variable overhead F 35.Managers have no ability to control the budget variance, T 36.Unfavorable variances are represented by debit balances in the overhead account. F 37.Unfavorable variances are represented by credit balances in the overhead account. T 38.Favorable variances are represented by credit balances in the overhead account. F 39.Favorable variances are represented by debit balances in the overhead account. F 40.Favorable variances are always desirable for production. F 41.Expected standards are a valuable tool for motivation and control. T 42.Practical standards are the most effective standards for controlling and motivating workers. F 43.Ideal standards are an effective means of controlling variances and motivating workers.