# A purpose of standard costing is to: - 41801

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Question  1of 20         5.0 Points

A purpose of standard costing is to:

A. control costs.

B. allocate costs more accurately.

C. replace subjective decision making.

D. compute the breakeven point.

Question 2 of 20         5.0 Points

A(n) __________ cost is synonymous with the product cost calculated in a conventional standard cost accounting system.

A. fixed

B. direct

C. joint

D. expected

Question 3 of 20         5.0 Points

An expression of the hourly labor pay cost per function or job classification that is expected to exist during the next accounting period is the definition of a:

A. direct labor time standard.

B. direct materials quantity standard.

C. direct labor rate standard.

Question 4 of 20         5.0 Points

Multiplying the standard price of direct materials by the standard quantity for direct materials yields:

A. the direct materials price variance.

B. the direct materials quantity variance.

C. the standard direct materials cost.

D. nothing; the two components should be added together.

Question 5 of 20         5.0 Points

Which of the following provides an explanation of why the variable overhead rate is separated from the fixed overhead rate in standard costing?

A. There is no justifiable reason; their separation is merely to simplify entries.

B. Both calculations divide by the same direct labor hours, but the numerator is different for each calculation.

C. The variable overhead rate is calculated using actual direct labor hours, whereas the fixed overhead rate is calculated using normal capacity direct labor hours.

D. Different application bases are generally appropriate.

Question 6 of 20         5.0 Points

The primary difference between a fixed (static) budget and a flexible budget is that a fixed budget:

A. cannot be changed after the period begins, whereas a flexible budget can be changed after the period begins.

B. is concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales.

C. is a plan for a single level of production, whereas a flexible budget is several plans (one for each of several production levels).

D. includes only fixed costs, whereas a flexible budget includes only variable costs.

Question 7 of 20         5.0 Points

The formula used to compute budgeted total cost at any level of activity is presented in the:

A. flexible budget.

B. performance report.

C. static budget.

D. cash flow forecast.

Question 8 of 20         5.0 Points

The difference between the standard quantity allowed and the actual quantity used multiplied by standard price is the equation for computing the:

A. direct labor efficiency variance.

B. direct materials price variance.

C. direct labor rate variance.

D. direct materials quantity variance.

Question 9 of 20         5.0 Points

The overhead variance is equal to the difference between:

Question 10 of 20       5.0 Points

A favorable fixed overhead volume variance for a manufacturing company could indicate:

A. the creation of excess inventory.

C. sales exceeded production.

Question 11 of 20       5.0 Points

Irrelevant costs include costs that are:

A. different among alternatives.

B. avoidable.

C. sunk.

D. opportunity costs.

Question 12 of 20       5.0 Points

The difference in total costs between two alternatives is referred to as the:

A. direct cost.

B. incremental cost.

C. sunk cost.

D. opportunity cost.

Question 13 of 20       5.0 Points

The purpose of incremental analysis is to find the alternative:

A. that contributes the most to operating income.

B. that brings in the most revenue.

C. with the lowest fixed costs.

D. with the fewest relevant costs.

Question 14 of 20       5.0 Points

In a special-order decision, which of the following costs would normally be irrelevant?

A. Packaging costs

B. Direct labor

D. Fixed selling expenses

Question 15 of 20       5.0 Points

Avoidable costs are important for:

A. product mix decisions.

B. sell or process-further decisions.

C. decisions to eliminate unprofitable segments.

D. pricing decisions for special orders.

Question 16 of 20       5.0 Points

Direct costs include:

A. all product costs.

B. variable product costs.

C. some identifiable fixed costs and variable product costs.

D. some identifiable fixed costs.

Question 17 of 20       5.0 Points

As a general rule, a segment should not be eliminated if:

A. the company is profitable.

B. its direct fixed costs exceed its contribution margin.

C. the segment's fixed costs equal its variable costs.

D. its contribution margin exceeds direct fixed costs.

Question 18 of 20       5.0 Points

The point at which products are separated in a joint production process is the:

A. split-off point.

B. joint product point.

C. separation point.

D. breakeven point.

Question 19 of 20       5.0 Points

Relevant costs in a sell or process-further decision include:

D. joint product costs.

Question 20 of 20       5.0 Points

The objective of the sell or process-further decision is to:

A. maximize production.

B. maximize joint costs.

C. minimize processing.

D. maximize operating income.

Solution Description

1. A

2. D

3. C