Cost Control and Variance Analysis Essay

Cost Control and Variance Analysis

1. When preparing a performance report for a cost center using flexible budgeting techniques, the budget cost
column should be based on the
A. Budgeted amount in the original budget prepared before the beginning of the year.
B. Actual amount for the same period in the preceding year.
C. Budget adjusted to the actual level of activity for the period being reported.
D. Budget adjusted to the planned level of activity for the period being reported.
2. A flexible budget is appropriate for
A. Control of direct materials and direct labor but not selling and administrative expenses.
B. Any level of activity.
C. Control of direct labor and direct materials but not fixed factory overhead.
D. Control of selling and administrative expenses but not factory overhead.
3. Which one of the following is true concerning standard costs?
A. Standard costs are estimates of costs attainable only under the most ideal conditions, but rarely
practicable.
B. Standard costs are difficult to use with a costing system.
C. If properly used, standards can help motivate employees.
D. Unfavorable variances, material in amount, should be investigated, but large favorable variances need
not be investigated.
4. The standard unit cost is used in the calculation of materials price and materials quantity (usage) variances.
True or False?
5. Under a standard cost system, the materials price variances are usually the responsibility of the
A. Production manager.
B. Cost accounting manager.
C. Sales manager.
D. Purchasing manager.
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6. Under a standard cost system, the materials usage (quantity) variances are the responsibility of
A. Production supervisor.
B. Purchasing and industrial engineering.
C. Purchasing and sales.
D. Sales and industrial engineering.
7. An unfavorable direct labor efficiency variance could be caused by a(n)
A. Unfavorable variable overhead spending variance.
B. Favorable variable overhead spending variance.
C. Unfavorable fixed overhead volume variance.
D. Unfavorable materials quantity (usage) variance.
8. How is labor rate variance computed?
A. The difference between standard and actual rates, times standard hours.
B. The difference between standard and actual hours, times actual rate.
C. The difference between standard and actual rates, times actual hours.
D. The difference between standard and actual hours, times the difference between standard and actual
rates.

Cost Control and Variance Analysis Essay

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