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STANDARD COSTS homework questions

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Question;229. A;is expressed as a unit amount, whereas a _________________ is;expressed as a total amount.;230. Standards which represent optimum;performance under perfect operating conditions are called;standards, but most companies use _________________ standards which are;rigorous but attainable.;231. In developing a standard cost for direct;materials used in making a product, consideration should be given to two;factors: (1) __________________ per unit;of direct materials and (2) the __________________ of direct materials to;produce one unit of product.;232. The difference between actual hours times;the actual pay rate and actual hours times the standard pay rate is the labor;variance.;233. The standard number of hours allowed times;the predetermined overhead rate is the amount of ________________ to the;products produced.;234. The difference between actual quantity of;materials times the standard price and standard quantity times the standard;price is the materials ________________ variance.;235. If the actual direct labor hours worked is;greater than the standard hours, the labor quantity variance will be;and the labor rate variance will be;if the standard rate of pay is greater than the actual rate of pay.;236. In using variance reports, top management;normally looks for _________________ variances.;a237. A two-variance approach to analyzing;overhead variances requires the calculation of the overhead;variance and the overhead ________________ variance.;a238. The overhead ______________ variance is the;difference between normal capacity hours and standard hours allowed times the;fixed overhead rate.;MATCHING;239. Match the items in the two columns below by;entering the appropriate code letter in the space provided.;A. Variances F. Materials price variance;B. Standard costs G. Labor quantity variance;C. Standard cost accounting system aH. Overhead controllable variance;D. Normal standards aI. Overhead volume variance;E. Ideal standards J. Standard hours allowed;1. The difference between actual overhead;incurred and overhead budgeted for the standard hours allowed.;2. The hours that should have been worked for the;units produced.;3. The difference between the actual quantity;times the actual price and the actual quantity times the standard price.;4. The difference between total actual costs and;total standard costs.;5. The difference between actual hours times the;standard rate and standard hours times the standard rate.;6. Predetermined unit costs that are measures of;performance.;7. The difference between normal capacity hours;and standard hours allowed times the fixed overhead rate.;8. Standards based on an efficient level of;performance that are attainable under expected operating conditions.;9. Standards based on the optimum level of;performance under perfect operating conditions.;10. A double-entry system of accounting in which;standard costs are used in making entries and variances are recognized in the;accounts.;A;SHORT-ANSWER ESSAY QUESTIONS;S-A E 240;(a) Explain the similarities and differences;between standards and budgets.;(b) Contrast the accounting for standard and budgets.;S-A E 241;Star Industries computes variances as a basis for;evaluating the performance of managers responsible for controlling costs. For;several months, the labor quantity variance has been unfavorable. Briefly;explain what could be causing the unfavorable labor quantity variance and;indicate what type of corrective action, if any, might be taken.;S-A E 242;In reviewing the activities of the Mixing;Department for the month of June, the manager of the department notices that;there was an unfavorable materials price variance for the month and there was an unfavorable materials quantity;variance. Under what circumstances, if any, can the responsibility for each;variance be placed on (a) the purchasing department and (b) the production;department?;S-A E 243;What are the four perspectives used in the;balanced scorecard? Discuss the nature of each, and how the perspectives are;linked.;S-A E 244 (Ethics);Fulmar;Manufacturing Co. is the manufacturer of miniature models, especially of;automobiles with historical interest. The company is developing new standard;costs. Patrick Webb suggests that the new standards for materials should not;include any waste for liquid plastics that spill out of the molds. "After;all," he says, "we're trying to be a world class company. When we;build in waste, we tell the workers it's okay to waste some." Sharon Berry;another manager, disagrees. "If we don't allow for some normal human;error," she says, "we'll have a mighty unhappy work force. Also, I;think that these kinds of perfection standards exploit the workers. I certainly;wouldn't want to be held up to perfection every day?what could I do but;fail?;S-A E 244 (Cont.);The argument;continued. Finally, the standards were prepared. All standards were prepared;according to normal expected performance, except that for materials, an ideal;standard was used.Sharon, still maintaining the unfairness of the system, refused to hold her;workers accountable for materials quantity variances.;Required;1. Are;ideal standards unethical? Explain;briefly.;2. Is;it unethical forSharon to refuse to support the standards? Explain.;S-A E 245 (Communication);Vincent Bassani;has come to the accounting department for help in interpreting his variance;report. He says that he understands that last month was not a very good one for;output, but he really thought everyone put forth good effort, so he is confused;about the existence of an unfavorable labor efficiency variance. He cites as an;example of the workers' effort their willingness to work extra hours to get;full output, even when a whole week's worth of production had to be scrapped.;He knew that his materials costs would be higher, and that overtime would make;his rate variance unfavorable, but he certainly didn't think his workers had;been inefficient.;Required;Write a short note toVincent explaining the probable cause of the unfavorable;labor efficiency variance.

 

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