CHAPTER 23: PERFORMANCE EVALUATION USING VARIANCES FROM
STANDARD COSTS
1. A variable cost system is an accounting system where standards are set for each manufacturing cost element.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
2. One reason not to depend solely on historical records to set standards is that there may be inefficiencies contained in
past costs.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
3. Standard costs serve as a device for measuring efficiency.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 23: Performance Evaluation Using Variances from Standard Costs
4. The standard cost is how much a product should cost to manufacture.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility ACCT.IMA.09 -
Performance Measurement BUSPROG: Analytic
5. Accounting systems that use standards for product costs are called standard cost systems.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
6. Accounting systems that use standards for product costs are called budgeted cost systems.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 23: Performance Evaluation Using Variances from Standard Costs
7. Normally, standard costs should be revised when labor rates change to incorporate new union contracts.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
8. Standard costs should always be revised when they differ from actual costs.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
9. Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from
standard costs.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 23: Performance Evaluation Using Variances from Standard Costs
10. In most businesses, cost standards are established principally by accountants.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
11. It is correct to rely exclusively on past cost data when establishing standards.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
12. Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials
spoilage.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
STANDARD COSTS
1. A variable cost system is an accounting system where standards are set for each manufacturing cost element.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
2. One reason not to depend solely on historical records to set standards is that there may be inefficiencies contained in
past costs.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
3. Standard costs serve as a device for measuring efficiency.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 23: Performance Evaluation Using Variances from Standard Costs
4. The standard cost is how much a product should cost to manufacture.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility ACCT.IMA.09 -
Performance Measurement BUSPROG: Analytic
5. Accounting systems that use standards for product costs are called standard cost systems.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
6. Accounting systems that use standards for product costs are called budgeted cost systems.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 23: Performance Evaluation Using Variances from Standard Costs
7. Normally, standard costs should be revised when labor rates change to incorporate new union contracts.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
8. Standard costs should always be revised when they differ from actual costs.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
9. Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from
standard costs.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 23: Performance Evaluation Using Variances from Standard Costs
10. In most businesses, cost standards are established principally by accountants.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
11. It is correct to rely exclusively on past cost data when establishing standards.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
12. Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials
spoilage.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.23-01 - 23-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
