ACCT2101 Chapter 11

Standards differ from budgets in that:

• budgets but not standards may be used in valuing inventories

• budgets but not standards may be journalized and posted

• budgets are a total amount and standards are a unit amount

• only budgets contribute to management planning and control

Standard costs:

• are imposed by governmental agencies

• are predetermined unit costs which companies use as a measure of performance

• can be used by manufacturing companies but not by service or not-for-profit companies

• All of the answer choices are correct

The advantages of standard costs include all of the following except

• management by exception may be used

• management planning is facilitated

• they may simplify the costing of inventories

• management must use a static budget

Normal Standards:

• allow for rest periods, machine breakdowns, and setup time

• represent levels of performance under perfect operating conditions

• are rarely used because managers believe they lower workforce morale

• are more likely than ideal standards to result in unethical practices

The setting of standards is:

• a managerial accounting decision

• a management decision

• a worker decision

• preferably set at the ideal level of performance

Which of the following would not be an objective used in the customer perspective of the balanced scorecard approach?

• Percentage of customers who would recommend product to a friend

• Customer retention

• Brand recognition

• Earnings per share

The equation for computing the total overhead variance is:

• actual overhead less overhead applied

• overhead budgeted less overhead applied

• actual overhead less overhead budgeted

• no correct answer is correct

Which of the following is correct about the total overhead variance?

• budgeted overhead and overhead applied are the same

• total actual overhead is composed of variable overhead, fixed overhead, and period costs

• standard hours actually worked are used in computing the variance

• standard hours allowed for the work done is the measure used in computing the variance