Multiple Choice Questions
1. Historical experience should be used with caution in setting standards because
a. Most companies keep poor records.
b. Ideal standards are always better than historical standards.
c. They may not be achievable by operating personnel.
d. They may perpetuate operating inefficiencies.
e. None of the above.
2. Standards set by engineering studies
a. Can determine the most efficient way of operating.
b. Can provide rigorous guidelines.
c. May not be achievable by operating personnel.
d. Often do not allow operating personnel to have much input.
e. All of the above.
3 The standard cost per unit of output for a particular input is calculated using the equation
a. Actual input price per unit 3 Actual input used per unit.
b. Standard input price 3 Inputs allowed for the actual output.
c. Standard input price 3 Actual inputs.
d. Standard price per unit 3 Standard units produced.
e. Standard input price 3 Standard input allowed per unit of output produced.
4 A currently attainable standard is one that
a. Relies on maximum efficiency.
b. Uses only historical experience.
c. Can be achieved under efficient operating conditions.
d. Is based on ideal operating conditions.
e. None of the above.
5 An ideal standard is one that
a. Relies on maximum efficiency.
b. Uses only historical experience.
c. Can be achieved under efficient operating conditions.
d. Makes allowances for normal breakdowns, interruptions, less than perfect skill, and so on.
e. None of the above.
6 Reasons for adopting a standard cost system include
a. To enhance operational control.
b. To imitate most other firms.
c. To encourage purchasing managers to purchase cheap materials.
d. That the weighted average method can be used for process manufacturers.
e. None of the above.
7 Standard costs are developed for
a. Direct materials.
b. Direct labor.
c. Variable overhead.
d. Fixed overhead.
e. All of the above.
8 The underlying details for the standard cost per unit are provided in
a. The balance sheet.
b. The standard production budget.
c. The standard cost sheet.
d. The standard work-in-process account.
e. None of the above.
9. The standard quantity of materials allowed is computed by the equation
a. Unit quantity standard × Standard output.
b. Unit quantity standard × Actual output.
c. Unit quantity standard × Practical output.
d. Unit quantity standard × Normal output.
e. None of the above.
10 The standard direct labor hours allowed is given by the equation
a. Unit labor standard × Normal output.
b. Unit labor standard × Practical output.
c. Unit labor standard × Standard output.
d. Unit labor standard 3 Actual output.
e. Unit labor standard 3 Theoretical output.