1.

"Standard costs are the expected total cost of completing a job." Is this correct? Explain why or why not. "A standard imposed by a governmental agency is known as a regulation." Is this correct? Explain why or why not. 2.

Explain the similarities and differences between standards and budgets. Contrast the accounting for standards and budgets. 3. Standard costs facilitate management planning. What are the other advantages of standard costs?

4. Contrast the roles of the management accountant and management in setting standard costs.

5. Distinguish between an ideal standard and a normal standard.

6. What factors should be considered in setting (a) the direct materials price standard and (b) the direct materials quantity standard?

7. "The objective in setting the direct labor quantity standard is to determine the aggregate time required to make one unit of product." Is this correct? Explain why or why not. What allowances should be made in setting this standard?

8. How is the predetermined overhead rate determined when standard costs are used?

9. What is the difference between a favorable cost variance and an unfavorable cost variance?

10. In each of the following equations, supply the words that should be inserted for each number in parentheses.

(Actual quantity (1)) (Standard quantity (2)) = Total materials variance ((3) Actual price) (Actual quantity (4)) = Materials price variance (Actual quantity (5)) ((6) Standard price) = Materials quantity variance 11. In the direct labor variance matrix, there are three factors: (1) Actual hours Actual rate, (2) Actual hours Standard rate, and (3) Standard hours Standard rate. Using the numbers, indicate the equations for each of the direct labor variances.

12. Mikan Company's standard predetermined overhead rate is $9 per direct labor hour. For the month of June, 26,000 actual hours were worked, and 27,000 standard hours were allowed. How much overhead was applied?

13. How often should variances be reported to management? What principle may be used with variance reports?

14. What circumstances may cause the purchasing department to be responsible for both an unfavorable materials price variance and an unfavorable materials quantity variance?

15. What are the four perspectives used in the balanced scorecard? Discuss the nature of each, and how the perspectives are linked.

16. Kerry James says that the balanced scorecard was created to replace financial measures as the primary mechanism for performance evaluation. He says that it uses only nonfinancial measures. Is this true?

17. What are some examples of nonfinancial measures used by companies to evaluate performance?

18. (a) How are variances reported in income statements prepared for management? (b) Can standard costs be used in preparing financial statements for stockholders? Explain.

*19. (a) Explain the basic features of a standard cost accounting system. (b) What type of balance will exist in the variance account when (1) the materials price variance is unfavorable and (2) the labor quantity variance is favorable?

*20. If the $9 per hour overhead rate in Question 12 includes $5 variable, and actual overhead costs were $248,000, what is the overhead controllable variance for June? The normal capacity hours were 28,000. Is the variance favorable or unfavorable?

*21. What is the purpose of computing the overhead volume variance? What is the basic equation for this variance?

*22. Alma Ortiz does not understand why the overhead volume variance indicates that fixed overhead costs are either underapplied or overapplied. Clarify this matter for Alma.