Multiple Choice Questions
33.An important advantage of a standard cost system is that standard costs:
A. Cause financial statements to be more comparable because different companies cost their inventories in the same manner.
B. Can be determined with great precision so that inventories are valued with complete accuracy.
C. Cause a lower net income, resulting in lower income taxes.
D. Focus attention on trouble spots and facilitate prompt corrective action.
34.Standard costs:
A. May be used in job order cost systems but not in process cost accounting systems.
B. Should be revised upward when actual costs are higher than expected because of waste and inefficiency.
C. Are the same for all companies in a given industry.
D. Are the costs that should be incurred to produce a product under normal conditions.
35.Which of the following is
not
an advantage of using a standard cost system?
A. It eliminates the need for analysis of variances.
B. It facilitates establishing an effective system of responsibility accounting.
C. It requires an analysis of all aspects of operations.
D. It helps management control costs.
36.Which statement is true regarding a standard cost system?
A. Both actual and standard costs are used.
B. Only standard costs are used.
C. If variances occur, then something negative in the operations has occurred.
D. Standards are used only when actual amounts are not available.
37.In a system designed to measure cost variances, goods transferred from the Work in Process account to the Finished Goods Inventory are valued at:
A. Actual cost.
B. Market value.
C. Standard cost.
D. The lower of actual cost or market value.
38.A standard cost is the per-unit cost incurred under:
A. Ideal operating conditions.
B. Perfect operating conditions.
C. Normal, but efficient operating conditions.
D. Minimally acceptable operating conditions.
39.Refer to the information above. What is the standard cost for direct materials per unit for Starbright's single product?
A. $50 per unit.
B. $100 per unit.
C. $150 per unit.
D. $125 per unit.
40.Refer to the information above. What is the standard cost for direct labor per unit for Starbright's single product (closest to)?
A. $100 per unit.
B. $287 per unit.
C. $180 per unit.
D. $285 per unit.
41.Refer to the information above. What is the standard total manufacturing overhead cost?
A. $191,250.
B. $18,700.
C. $487,900.
D. $209,950.
42.In establishing standard costs for labor, management must look at all of the following
except:
A. Time allowed to produce each product.
B. Direct labor requirements for each product.
C. The wage rate of a direct laborer.
D. The quantity of materials for each product.