ACCT 2300 - Final Exam Questions with Correct Answers Latest Update 2025/2026
cost standards - Answers specify how much should be paid for each unit of the input (ie. DM or
DL)
quantity standards - Answers specify how much of an input should be used to make a product
or provide a service
standards - Answers benchmarks or 'norms' for measuringperformance.
standard cost card - Answers a detailed listing of the standards that should go into making a
unit of product
Variance - Answers difference between the actual results and standards
-Any deviations from standard (i.e., variances) that aredeemed significant are bought to the
attention ofmanagement for further investigation
Price and quantity variances are determined separately for two reason? - Answers 1. Different
managers are usually responsible for buyingand for using the inputs. For example, the purchasin
gmanagers is responsible for the price paid to purchas edirect materials where as the
production manager is responsible for the quantity of direct materials used tomake goods
2. The buying and using activities occur at different points in time. For example, direct material
purchases may be held in inventory for a period of time before being used in production
Direct Material Price Variance - Answers (AQ x AP) - (AQ x SP)
A stands for actual
Q stands for quantity
P stands for price
S stands for standard
NOTE: The AQ in the DM price variance represents theactual quantity of direct materials
PURCHASED
Direct Material Quantity Variance - Answers AQ x SP) - (SQ x SP)
NOTE: The AQ in the DM quantity variance represents the actual quantity of direct materials
USED IN PRODUCTION
Standard Quantity - Answers (standard quantity of DM per unit x number of units produced)
, Direct Labor Rate Variance - Answers (AH x AR) - (AH x SR)
NOTE: The (AH x AR) component represents the actual cost of direct labor incurred
-measures the difference between what was actually PAID to the direct laborers and what
should have been paid, according to the standards
Direct Labor Efficiency Variance - Answers (AH x SR) - (SH x SR)
-measures the difference between the amount of direct labor that was actually USED to produce
goods andhow much should have been used, according to thestandards
Standard Hours - Answers (standard hours of DL per unit xnumber of units produced)
Unfavorable Variance - Answers a variance that causes operating income to be lower than
budgeted
positive variance
Favorable Variance - Answers A variance that causes operating income to be higher than
budgeted
- negative variance
Variable overhead spending variance - Answers Actual Variable Overhead Cost - (AH x SR)
-measures the difference between what was actually SPENT on variable overhead and what
should have been spent, according to the standards
Variable Overhead Efficiency Variance - Answers (AH x SR) - (SH x SR)
-measures the difference between the actual QUANTITIY of the activity (direct labor hours) used
and how much should have been used, according to the standard
standard hours-VOH - Answers (standard hours per unit x number of units produced)
sales budget - Answers a detailed schedule showing expected sales expressed in both dollars
and units
schedule of expected cash collections - Answers shows the cash expected to be collected each
budget period
Budgeted accounts receivable - Answers represent uncollected sales
Production Budget - Answers calculates the number of units that must be produced each
budget period in order to:
1. Meet expected sales
cost standards - Answers specify how much should be paid for each unit of the input (ie. DM or
DL)
quantity standards - Answers specify how much of an input should be used to make a product
or provide a service
standards - Answers benchmarks or 'norms' for measuringperformance.
standard cost card - Answers a detailed listing of the standards that should go into making a
unit of product
Variance - Answers difference between the actual results and standards
-Any deviations from standard (i.e., variances) that aredeemed significant are bought to the
attention ofmanagement for further investigation
Price and quantity variances are determined separately for two reason? - Answers 1. Different
managers are usually responsible for buyingand for using the inputs. For example, the purchasin
gmanagers is responsible for the price paid to purchas edirect materials where as the
production manager is responsible for the quantity of direct materials used tomake goods
2. The buying and using activities occur at different points in time. For example, direct material
purchases may be held in inventory for a period of time before being used in production
Direct Material Price Variance - Answers (AQ x AP) - (AQ x SP)
A stands for actual
Q stands for quantity
P stands for price
S stands for standard
NOTE: The AQ in the DM price variance represents theactual quantity of direct materials
PURCHASED
Direct Material Quantity Variance - Answers AQ x SP) - (SQ x SP)
NOTE: The AQ in the DM quantity variance represents the actual quantity of direct materials
USED IN PRODUCTION
Standard Quantity - Answers (standard quantity of DM per unit x number of units produced)
, Direct Labor Rate Variance - Answers (AH x AR) - (AH x SR)
NOTE: The (AH x AR) component represents the actual cost of direct labor incurred
-measures the difference between what was actually PAID to the direct laborers and what
should have been paid, according to the standards
Direct Labor Efficiency Variance - Answers (AH x SR) - (SH x SR)
-measures the difference between the amount of direct labor that was actually USED to produce
goods andhow much should have been used, according to thestandards
Standard Hours - Answers (standard hours of DL per unit xnumber of units produced)
Unfavorable Variance - Answers a variance that causes operating income to be lower than
budgeted
positive variance
Favorable Variance - Answers A variance that causes operating income to be higher than
budgeted
- negative variance
Variable overhead spending variance - Answers Actual Variable Overhead Cost - (AH x SR)
-measures the difference between what was actually SPENT on variable overhead and what
should have been spent, according to the standards
Variable Overhead Efficiency Variance - Answers (AH x SR) - (SH x SR)
-measures the difference between the actual QUANTITIY of the activity (direct labor hours) used
and how much should have been used, according to the standard
standard hours-VOH - Answers (standard hours per unit x number of units produced)
sales budget - Answers a detailed schedule showing expected sales expressed in both dollars
and units
schedule of expected cash collections - Answers shows the cash expected to be collected each
budget period
Budgeted accounts receivable - Answers represent uncollected sales
Production Budget - Answers calculates the number of units that must be produced each
budget period in order to:
1. Meet expected sales
