11 companies use techniques like time and motion studies and consult industry quot b 4306430

11 companies use techniques like time and motion studies and consult industry quot b 4306430

11) Companies use techniques like time-and-motion studies, and consult industry “best practices” when developing standards. This is referred to as benchmarking.

12) The static budget is used to compute flexible budget variance or price and efficiency variances.

13) Which of the following is the correct formula to measure cost variance?

A) Cost Variance = (Actual Cost + Standard Cost) ÷ Actual Quantity

B) Cost Variance = (Actual Cost – Standard Cost) × Actual Quantity

C) Cost Variance = (Actual Cost + Standard Cost) + Actual Quantity

D) Cost Variance = (Actual Cost – Standard Cost) – Actual Quantity

14) Which of the following formulae is the correct formula to measure the efficiency variance?

A) Efficiency Variance = (Actual Quantity + Standard Quantity) – Standard Cost

B) Efficiency Variance = (Actual Quantity × Standard Quantity) ÷ Standard Cost

C) Efficiency Variance = (Actual Quantity ÷ Standard Quantity) × Standard Cost

D) Efficiency Variance = (Actual Quantity – Standard Quantity) × Standard Cost

15) Which of the following will result in an unfavorable direct labor cost variance?

A) when actual direct labor hours exceed standard direct labor hours

B) when actual direct labor hours are less than standard direct labor hours

C) when the actual direct labor rate exceeds the standard direct labor rate

D) when the actual direct labor rate is less than the standard direct labor rate

16) Which of the following will result in an unfavorable direct materials efficiency variance?

A) when the actual cost per unit of direct materials exceeds the standard cost of direct materials

B) when the actual cost per unit of direct materials is less than the standard cost of direct materials

C) when the actual quantity of direct materials used per unit exceeds the standard quantity of direct materials allowed per unit

D) when the actual quantity of direct materials used per unit is less than the standard quantity of direct materials allowed per unit

17) Which of the following best describes standard costs?

A) costs used as a budget for a single unit of product

B) costs incurred to produce a product

C) costs based on the average of current market values

D) costs used to compare with competitors' prices

18) A company is setting its direct materials and direct labor standards for its leading product. Materials cost from the supplier are $5 per square foot, net of purchase discount. Freight-in amounts to $0.10 per square foot. Basic wages of the assembly line personnel are $10 per hour. Payroll taxes are approximately 20% of wages. Benefits amount to $2 per hour. How much is the direct material cost standard (per square foot)?

A) $5.10 per square foot

B) $5.00 per square foot

C) $12.00 per square foot

D) $17.10 per square foot

19) A company is setting its direct materials and direct labor standards for its leading product. Materials cost from the supplier are $5 per square foot, net of purchase discount. Freight-in amounts to $0.10 per square foot. Basic wages of the assembly line personnel are $10 per hour. Payroll taxes are approximately 20% of wages. How much is the direct labor cost standard (per hour)?

A) $2 per hour

B) $10 per hour

C) $12 per hour

D) $17 per hour

20) Wood Designs Company, a custom cabinet manufacturing company, is setting standard costs for one of its products. The main material is cedar wood, sold by the square foot. The current cost of cedar wood is $4.00 per square foot from the supplier. Delivery costs are $0.25 per board foot. Carpenters' wages are $25.00 per hour. Payroll costs are $3.60 per hour and benefits are $5.00 per hour. How much is the direct materials cost standard (per square foot)?

A) $9.25 per square foot

B) $7.85 per square foot

C) $4.25 per square foot

D) $4.00 per square foot

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