Choose the correct answers.

QUESTION 1

If less direct materials are used than expected by the standard

1. the direct materials efficiency variance is favourable
2. the direct materials price variance is unfavourable
3. the direct materials price variance is favourable
4. the direct materials efficiency variance is unfavourable

QUESTION 2

Which of these factors could not be the cause of a direct labour efficiency variance?

1. a new wage rate agreed between unions and management
2. a change in the production process that affects the usage of direct labour hours
3. improved worker training
4. labour hour standards that are too low

QUESTION 3

Revenue variances can be broken down into:

1. sales spending variance and sales volume variance.
2. sales spending variance and sales efficiency variance.
3. sales price variance and sales efficiency variance.
4. sales price variance and sales volume variance.

QUESTION 5

Multiple cost pools and cost objects are a feature of:

1. activity-based costing
2. traditional costing systems and direct allocation costing systems.
3. traditional costing systems.
4. direct allocation costing systems.

QUESTION 7

The managers of Financial Burden Ltd are analysing some of their corporate costs to determine the cost of each department's use of administrative services. The accountant wants to allocate the costs of payroll processing using an activity-based costing system. The most appropriate cost driver for the payroll processing cost pool is the:

1. current tax rate for employees.
2. number of pay periods each month.
3. number of employees
4. total number of deductions from an individual employee's pay.

QUESTION 8

If direct materials are added at the beginning of the process and beginning inventory is 5,000 units that are 25% complete, under FIFO equivalent units (EU) for beginning WIP are

1. Direct materials: 5,000 EU; Conversion costs: 3,750 EU
2. Direct materials: 0 EU; Conversion costs: 1,250 EU
3. Direct materials: 0 EU; Conversion costs: 3,750 E
4. Direct materials: 5,000 EU; Conversion costs: 1,250 EU

QUESTION 9

Conversion costs are

1. direct labour and overhead costs
2. overhead costs
3. materials and overhead costs
4. materials and direct labour costs

QUESTION 10

Which type of firm uses process costing?

1. a firm which mass produces
2. a manufacturer
3. a retailer
4. a firm that provides personal services

QUESTION 11

Which of the following is the same amount in the master budget and the flexible budget?

1. Sales volume
2. Variable costs
3. Direct costs
4. Fixed costs

QUESTION 12

Underapplied and overapplied overhead arise because

1. the usage of the overhead allocation base by the product, e.g. machine hours is an estimate
2. the overhead rate and the amount of the allocation base used by the product are both estimates
3. none of the above
4. overhead applied to the product during the year, based on an estimated overhead rate, is compared with actual overhead incurred

QUESTION 13

Standards may be derived using:

1. historical data.
2. all of the options available.
3. the assistance of industrial engineers.
4. benchmarking.

QUESTION 14

All of the following products or services are likely to use job costingexcept

1. the manufacture of cans of pineapple slices
2. the costing by a solicitor of a dry cleaner's bankruptcy case
3. the building of a private yacht for a customer
4. an audit of a town library by a chartered accountant

QUESTION 15

If actual costs are less than budgeted costs then the variance will be:

1. unfavourable.
2. unfavourable and immaterial.
3. favourable.
4. immaterial.

QUESTION 16

The difference between the standard and actual prices paid for resources purchased is a(n):

1. volume variance.
2. price variance.
3. efficiency variance.
4. efficiency variance.

QUESTION 17

If the conclusion from a variance analysis is that the benchmark is inappropriate then the correct management action is to:

1. revise the benchmark.
2. do nothing.
3. write off the variance against cost of goods sold.
4. replace the manager who set the benchmark.

QUESTION 18

If a variance analysis shows that operations are better than expected, managers should:

1. change the accounting records so that unrealistic expectations aren't imposed in future.
2. do nothing.
3. monitor quality to ensure it was maintained.
4. revise standard costs to make them harder to achieve.

QUESTION 19

Aslowas Ltd is a large merchandiser that employs numerous accounts payable clerks. Their jobs involve processing invoices and paying invoices. Which of the following is the most likely cost driver for the accounts payable activity cost pool?

1. Number of invoices processed
2. Number of journal entries
3. Average dollar amount for each purchase
4. Number of staff in the administration building