Multiple Choice Questions
1. Historical experience should be used with caution in setting standards because
a. They may perpetuate operating inefficiencies.
b. Ideal standards are always better than historical standards.
c. They may not be achievable by operating personnel.
d. Most companies keep poor records.
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 these.
3. The standard cost per unit of output for a particular input is calculated as
a. Actual input price per unit x Actual input used per unit.
b. Standard input price x Inputs allowed for the actual output.
c. Standard input price x Standard input allowed per unit of output produced.
d. Standard price per unit x Standard units produced.
e. Standard input price x Actual inputs.
4. A currently attainable standard is one that
a. Relies on maximum efficiency.
b. Uses only historical experience.
c. Is based on ideal operating conditions.
d. Can be achieved under efficient operating conditions.
e. None of these.
5. An ideal standard is one that
a. Uses only historical experience.
b. Relies on maximum efficiency.
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 these.
6. Reasons for adopting a standard costing system include
a. To encourage purchasing managers to purchase cheap materials.
b. To imitate most other firms.
c. To enhance operational control.
d. That the weighted average method can be used for process manufacturers.
e. None of these.
7. Standard costs are developed for
a. Indirect materials.
b. Indirect labor.
c. Variable selling cost.
d. Fixed overhead.
e. All of these.
8. The underlying details for the standard cost per unit are provided in
a. The standard work- in- process account.
b. The standard production budget.
c. The standard cost sheet.
d. The balance sheet.
e. None of these.
9. The standard quantity of materials allowed is computed as
a. Unit quantity standard x Standard output.
b. Unit quantity standard x Normal output.
c. Unit quantity standard x Practical output.
d. Unit quantity standard x Actual output.
e. none of these.
10. The standard direct labor hours allowed is computed as
a. Unit labor standard x Actual output.
b. Unit labor standard x Practical output.
c. Unit labor standard x Standard output.
d. Unit labor standard x Normal output.
e. Unit labor standard x Theoretical output.