1.In a standard cost system, the resources applied to production are recorded as additions to work in process inventory using the standard quantities and the standard prices for each actual unit added.

A.True

B.False

2.Ideal standards, while requiring managers to work to ensure that employees accept them, can be very useful in forecasting and planning.

A.True

B.False

3.Which of the following statements is not true about the use of a standard cost system?

A.Standards can be used by individuals to judge their own performance.

B.The use of standard costs can greatly simplify bookkeeping.

C.A favourable variance will always be good thing for a business.

D.As long as costs do not fall significantly outside of standards managers can usually focus on other issues.

4.The standard cost card for a product includes a list of all inputs required to complete one unit of the product with the standard quantity and standard cost of each input.

A.True

B.False

5.A flexible budget is "flexible" in the sense that a budget can be prepared for any level of activity, but once a budget is set the budget figures are not changed if actual activity later proves to be different than budgeted activity.

A.True

B.False

6. The standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times are referred to as:

A.ideal standards.

B.budgeted standards.

C.normal standards.

D.practical standards.

7.A favourable labour rate variance indicates that:

A.the standard rate exceeds the actual rate.

B.the actual rate exceeds the standard rate.

C.standard hours exceed actual hours.

D.actual hours exceed standard hours.

8.A favourable material price variance coupled with an unfavourable material usage variance would most likely result from:

A.the purchase of low quality materials.

B.problems with processing machines.

C.changes in the product mix.

D.problems with labour efficiency.