BSA 3102: FINAL QUIZ 2 STANDARD COSTING Name: SECTION: Prof. Maria Teresa B. De Jesus 1. Multiple Choice. Encircle the correct letter. 1 Using standard costs a makes employees less "cost-conscious c makes management by exception more difficult bprovides a basis for evaluating cost control d. increases clerical costs 2. If standard costs are incorporated into the accounting system, it may simplify the costing of inventories and reduce clerical costs. bit can eliminate the need for the budgeting process the accounting system will produce information that is less relevant than the historical cost accounting system d approval of the stockholders is required 3. Which of the following statements about standard costs is false? a Properly set standards should promote efficiency. b. Standard costs facilitate management planning. Standards should not be used in "management by exception." d Standard costs can simplify the costing of inventories 4 Which of the following is not considered an advantage of using standard costs? a. Standard costs can reduce clerical costs. b. Standard costs can be useful in setting prices for finished goods. c. Standard costs can be used as a means of finding fault with performance. d. Standard costs can make employees "cost-conscious" 5. Standard costs are used in companies for a variety of reasons Which of the following is not ane of the benefits for using standard costs? a. Used to indicate where changes in technology and machinery need to be made. b. Used to value inventory c. Used to plan direct materials, direct labor, and factory manufacturing cost d. Used to control costs 6 The standard price and quantity of direct materials are separated because: a GAAP reporting requires this separation b direct materials prices are controlled by the purchasing department, and quantity used is controlled by the production department c standard quantities are more difficult to estimate than standard prices d standard prices change more frequently than standard quantities 7. If a company is concerned with the potential negative effects of establishing standards, it should a set loose standards that are easy to fulfill c. not employ any standards b. offer wage incentives to those meeting standards, d set tight standards in order to motivate people 8 Which of the following is not a reason standard costs are separated in two components? a the price and quantity variances need to be identified separately to correct the actual major differences. bidentifying variances determines which manager must find a solution to major discrepancies if a negative variance is over-shadowed by a favorable variance, managers may overlook potential corrections d variances brings attention to discrepancies in the budget and requires managers to revise budgets closer to actual 9. The principle of exceptions allows managers to a focus on correcting variances between standard costs and actual costs. b focus on correcting variances between variable costs and actual costs. c. focus on correcting variances between competitor's costs and actual costs d focus on correcting variances between competitor's costs and standard costs 10. At the end of the fiscal year, variances from standard costs are usually transferred to the direct labor account c. cost of goods sold account b factory overhead account d direct materials account 11 Which of the following is least likely to cause an unfavorable materials quantity(usage) variance? a Materials that do not meet specifications b. Machinery that has not been maintained properly Labor that possesses skills equal to those required by the standards d Scheduling of substantial overtime II. PROBLEMS (1.5 EACH) 1 Simms Corporation had a favorable direct-labor efficiency variance of P 6.000 for the period just ended The actual wage rate was PO 50 more than the standard rate of P12.00. If the company's standard hours allowed for actual production totaled 9.500 how many hours did the firm actuall