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23 - 1 Standard Costs and Balanced Scorecard MULTIPLE CHOICE QUESTIONS 39.What is a standard cost? a.The total number of units times the budgeted amount expected b.Any amount that appears on a budget c.The total amount that appears on the budget for product costs d.The amount management thinks should be incurred to produce a good or service 40.A.
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23 - 1 Standard Costs and Balanced Scorecard Ex. 218 Aztec, Inc.'s standard labor cost of producing one unit of product is 2 hours at the rate of $14.00 per hour. During February, 52,000 hours of labor are incurred at a cost of $13.80 per hour to produce 25,000 units of product. Instructions (a)Compute the.
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23 - 1 Standard Costs and Balanced Scorecard 21.The overhead controllable variance relates primarily to fixed overhead costs. 22.The overhead volume variance relates only to fixed overhead costs. 23.If production exceeds normal capacity, the overhead volume variance will be favorable. 24.There could be instances where the production department is responsible for a direct materials price.
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 198 The Pacific Division of Henson Industries reported the following data for the current year. Sales$4,000,000 Variable costs2,600,000 Controllable fixed costs800,000 Average operating assets5,000,000 Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the Pacific Division to submit plans to improve.
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23 - 1 Standard Costs and Balanced Scorecard 81.Scorpion Production Company planned to use 1 yard of plastic per unit budgeted at $81 a yard. However, the plastic actually cost $80 per yard. The company actually made 3,900 units, although it had planned to make only 3,300 units. Total yards used for.
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23 - 1 Standard Costs and Balanced Scorecard CHAPTER 23 STANDARD COSTS AND BALANCED SCORECARD TRUE-FALSE STATEMENTS 1.Inventories cannot be valued at standard cost in financial statements. 2.Standard cost is the industry average cost for a particular item. 3.A standard is a unit amount, whereas a budget is a total amount. 4.Standard costs may be incorporated into the.
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23 - 1 Standard Costs and Balanced Scorecard Ex. 211 Platt Company produces one product, a putter called PAR-putter. Platt uses a standard cost system and determines that it should take one hour of direct labor to produce one PAR-putter. The normal production capacity for this putter is 100,000 units per year. The.
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 203 Data for the following subsidiaries of Olive Manufacturing, which are operated as investment centers, are as follows: Fleming CompanyOak Company Sales$3,000,000$2,000,000 Controllable margin(1)(3) Average operating assets(2)4,000,000 Contribution margin1,200,000800,000 Controllable fixed costs500,000200,000 Return on Investment10%(4) Instructions Compute the missing amounts using the ROI formula. Ex. 204 The data for an investment center is given below.    .
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23 - 1 Standard Costs and Balanced Scorecard Ex. 213 Dart Company developed the following standard costs for its product for 2013: DART COMPANY Standard Cost Card Cost ElementsStandard Quantity×Standard Price=Standard Cost Direct materials4 pounds$  5$20 Direct labor2 hours1020 Variable overhead2 hours48 Fixed overhead2 hours2    4 $52 The company expected to work at the 120,000 direct labor hours level of activity and.
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 192 Campbell Clothing produces men's ties. The following budgeted and actual amounts are for 2013: CostBudget at 5,000 UnitsActual Amounts at 5,800 Units Direct materials$60,000$71,000 Direct labor75,00086,500 Equipment depreciation5,0005,000 Indirect labor7,5008,600 Indirect materials9,0009,600 Rent and insurance12,00013,000 Instructions Prepare a performance budget report for Campbell Clothing for the year. Ex. 193 Data concerning manufacturing overhead for.
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 185 Telemark Production's manufacturing costs for July when production was 2,000 units appears below: Direct materials$10 per unit Factory depreciation$16,000 Variable overhead10,000 Direct labor4,000 Factory supervisory salaries11,600 Other fixed factory costs3,000 Instructions How much is the flexible budget manufacturing cost amount for a month when 2,200 units are produced? Ex. 186 Webb, Inc. uses.
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22 - 1 Budgetary Planning and Responsibility Accounting MATCHING 217.Match the items below by entering the appropriate code letter in the space provided. A.Budgetary control              G.              Responsibility reporting system B.Static budget              H.              Return on Investment C.Flexible budget              I.              Profit center D.Responsibility accounting              J.              Investment center E.Controllable costs              K.              Indirect fixed costs F.Management by exception              L.              Direct fixed costs ____              1.The.
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23 - 1 Standard Costs and Balanced Scorecard Ex. 206 The following direct materials data pertain to the operations of Wright Co. for the month of December. Standard materials price$5.00 per pound Actual quantity of materials purchased and used16,500 pounds The standard cost card shows that a finished product contains 4 pounds of materials. The 16,500.
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 188 Cadiz Co. uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $300,000 to $360,000. Variable costs and their percentage relationships to sales are: Sales commissions5% Advertising4% Traveling7% Delivery1% Fixed selling expenses consist of sales salaries $40,000 and depreciation on delivery equipment $10,000. The.
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23 - 1 Standard Costs and Balanced Scorecard 121.All Urban Company produces a product requiring 4 pounds of material costing $3.50 per pound. During December, All Urban purchased 4,200 pounds of material for $14,112 and used the material to produce 500 products. What was the materials price variance for December? a.$560 F b.$588 F c.$112.
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23 - 1 Standard Costs and Balanced Scorecard BRIEF Exercises BE 191 Seven Manufacturing Corporation uses both standards and budgets. The company estimates that production for the year will be 100,000 units of Product Fast. To produce these units of Product Fast, the company expects to spend $600,000 for materials and $800,000 for labor. Instructions Compute.
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 196 Danner Co. has three divisions which are operated as profit centers. Actual operating data for the divisions listed alphabetically are as follows.       Operating Data      Women's ShoesMen's ShoesChildren's Shoes Contribution margin$280,000(3)$220,000 Controllable fixed costs  130,000(4)      (5) Controllable margin     (1)$  90,000    96,000 Sales  800,000  480,000      (6) Variable costs     (2)  330,000 .
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 189 A flexible budget graph for the Assembly Department shows the following: 1.At zero direct labor hours, the total budgeted cost line intersects the vertical axis at $120,000. 2.At normal capacity of 50,000 direct labor hours, the line drawn from the total budgeted cost line intersects.
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 200 Perez Corp. reported the following: Beginning of year operating assets$3,200,000 End of year operating assets3,000,000 Contribution margin1,000,000 Sales5,000,000 Controllable fixed costs643,000 Its required return is 10%. Instructions Compute the company’s ROI. Ex. 201 Lombard, Inc. has two investment centers and has developed the following information: Department ADepartment B Departmental controllable margin$120,000? Average operating assets?$400,000 Sales800,000250,000 ROI10%12% Instructions Answer the following.
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23 - 1 Standard Costs and Balanced Scorecard 131.Dillon has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, Dillon used 3,850 hours of labor at a total cost of $46,970. Dillon's total labor variance is a.$1,030 U. b.$800 U. c.$1,030 F. d.$1,930 F. 132.Dillon has a standard of.
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 187 Lapp Manufacturing uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $400,000 to $480,000. Variable costs and their percentage relationships to sales are: Sales commissions6% Advertising4% Traveling5% Delivery1% Fixed selling expenses consist of sales salaries $80,000 and depreciation on delivery equipment $20,000. Instructions Prepare.
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23 - 1 Standard Costs and Balanced Scorecard 91.Which one of the following statements is true? a.If the materials price variance is unfavorable, then the materials quantity variance must also be unfavorable. b.If the materials price variance is unfavorable, then the materials quantity variance must be favorable. c.Price and quantity variances move in the same.
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23 - 1 Standard Costs and Balanced Scorecard BE 195 In October, Glazier Inc. reports 42,000 actual direct labor hours, and it incurs $194,000 of manufacturing overhead costs. Standard hours allowed for the work done is 40,000 hours. Glazier’s predetermined overhead rate is $5.00 per direct labor hour. Instructions Compute the total manufacturing overhead variance.   aBE.
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23 - 1 Standard Costs and Balanced Scorecard 51.Standard costs a.may show past cost experience. b.help establish expected future costs. c.are the budgeted cost per unit in the present. d.all of these. 52.Which of the following statements about standard costs is false? a.Properly set standards should promote efficiency. b.Standard costs facilitate management planning. c.Standards should not be used in "management.
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23 - 1 Standard Costs and Balanced Scorecard 101.A company uses 20,000 pounds of materials for which it paid $6.00 a pound. The materials price variance was $15,000 unfavorable. What is the standard price per pound? a.$0.75 b.$5.25 c.$6.00 d.$6.75 102.If the materials price variance is $3,600 F and the materials quantity and labor variances are each.
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 202 The Atlantic Division of Stark Productions Company reported the following results for 2013: Sales$4,000,000 Variable costs3,200,000 Controllable fixed costs300,000 Average operating assets2,500,000 Management is considering the following independent alternative courses of action in 2014 in order to maximize the return on investment for the division. 1.Reduce controllable fixed costs.
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23 - 1 Standard Costs and Balanced Scorecard 11.Once set, normal standards should not be changed during the year. 12.In developing a standard cost for direct materials, a price factor and a quantity factor must be considered. 13.A direct labor price standard is frequently called the direct labor efficiency standard. 14.The standard predetermined overhead rate.
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23 - 1 Standard Costs and Balanced Scorecard 141.When is a variance considered to be 'material'? a.When it is large compared to the actual cost b.When it is infrequent c.When it is unfavorable d.When it could have been controlled more effectively 142.Variance reports are a.external financial reports. b.SEC financial reports. c.internal reports for management. d.all of these. 143.In using variance reports, management.
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22 - 1 Budgetary Planning and Responsibility Accounting S-A E  221 What is responsibility accounting? Explain the purpose of responsibility accounting. S-A E  222(Ethics) Dixon Corporation evaluates its managers based on return on investment (ROI). Kathryn Bricker and Lindsey Allan, managers of the electronics and housewares departments respectively, have recently suffered from declining profits in.
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 195 The Deluxe Division, a profit center of Riley Manufacturing Company, reported the following data for the first quarter of 2013: Sales$9,000,000 Variable costs6,300,000 Controllable direct fixed costs1,200,000 Noncontrollable direct fixed costs530,000 Indirect fixed costs300,000 Instructions (a)Prepare a performance report for the manager of the Deluxe Division. (b)What is the best measure.
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22 - 1 Budgetary Planning and Responsibility Accounting Ex. 194 Strickland Corp.'s manufacturing overhead budget for the first quarter of 2013 contained the following data: Variable Costs Indirect materials$40,000 Indirect labor24,000 Utilities20,000 Maintenance12,000 Ex. 194(Cont.) Fixed Costs Supervisor's salary$80,000 Depreciation16,000 Property taxes8,000 Actual variable costs for the first quarter were: Indirect materials$37,200 Indirect labor26,400 Utilities21,000 Maintenance10,600 Actual fixed costs were as expected except for property taxes which were $9,000..
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23 - 1 Standard Costs and Balanced Scorecard 151.Which is not one of the four most commonly used perspectives on a balanced scorecard? a.The financial perspective b.The customer perspective c.The external process perspective d.The learning and growth perspective 152.The balanced scorecard approach a.uses only financial measures to evaluate performance. b.uses rather vague, open statements when setting objectives in order.
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23 - 1 Standard Costs and Balanced Scorecard Ex. 219 The following direct labor data pertain to the operations of Murray Industries for the month of November: Standard labor rate$15.00 per hr. Actual hours incurred9,000 The standard cost card shows that 2.5 hours are required to complete one unit of product. The actual labor rate incurred.
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23 - 1 Standard Costs and Balanced Scorecard Ex. 203 Engines Done Right Co. is trying to establish the standard labor cost of a typical engine tune-up. The following data have been collected from time and motion studies conducted over the past month. Actual time spent on the tune-up1.0 hour Hourly wage rate$16 Payroll taxes10% of.
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23 - 1 Standard Costs and Balanced Scorecard Ex. 216 More Hits Company manufactures aluminum baseball bats that it sells to university athletic departments. It has developed the following per unit standard costs for 2013 for each baseball bat: Manufacturing       Direct Materials Direct Labor           Overhead Standard Quantity2 Pounds (Aluminum)1/2 hour1/2 hour Standard Price$4.00$10.00$6.00 Unit Standard Cost$8.00$5.00$3.00 In 2013,.
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23 - 1 Standard Costs and Balanced Scorecard 171.The overhead volume variance relates only to a.variable overhead costs. b.fixed overhead costs. c.both variable and fixed overhead costs. d.all manufacturing costs. a172.What does the controllable variance measure? a.Whether a company incurred more or less fixed overhead costs compared to the amount of overhead applied b.Whether a company incurred more or.
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23 - 1 Standard Costs and Balanced Scorecard Ex. 214 Flagstaff, Inc. uses standard costing for its one product, baseball bats. The standards call for 3 board-feet of wood at $1.40 per board-foot, and 45 minutes of work at $12 per hour per bat. Total manufacturing overhead costs were estimated at $9,450, of.
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23 - 1 Standard Costs and Balanced Scorecard 161.The overhead variances measure whether overhead costs Are Effectively ManagedWere Used Effectively a.ControllableControllable and Volume b.ControllableVolume c.Controllable and VolumeControllable d.VolumeControllable a162.The overhead volume variance is a.actual overhead less overhead budgeted for actual hours. b.actual overhead less overhead budgeted for standard hours allowed. c.overhead budgeted for actual hours less applied overhead. d.the fixed overhead rate.
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23 - 1 Standard Costs and Balanced Scorecard 181.Standards based on the optimum level of performance under perfect operating conditions are a.attainable standards. b.ideal standards. c.normal standards. d.practical standards. 182.The direct materials price standard should include an amount for all of the following except a.receiving costs. b.storing costs. c.handling costs. d.normal spoilage costs. 183.The standard unit cost is used in the calculation.
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23 - 1 Standard Costs and Balanced Scorecard Ex. 208 Lumberman Manufacturing provided the following information about its standard costing system for 2013: Standard DataActual Data Materials10 lbs. @ $4 per lbs.Produced4,000 units Labor3 hrs. @ $21 per hr.Materials purchased50,000 lbs. for $215,000 Budgeted production3,500 units Materials used41,000 lbs. Labor worked11,000 hrs. costing $220,000 Instructions Determine the amount of.
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23 - 1 Standard Costs and Balanced Scorecard Exercises Ex 201 Sonic, Inc. is planning to produce 2,500 units of product in 2013. Each unit requires 3 pounds of materials at $6 per pound and a half hour of labor at $16 per hour. The overhead rate is 75% of direct labor. Instructions (a)Compute the budgeted.
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23 - 1 Standard Costs and Balanced Scorecard Ex. 217 The standard cost of Product 245 manufactured by Albert Industries includes 2 pounds of direct materials at $4.00 per pound. During September, 40,000 pounds of direct materials are purchased at a cost of $3.85 per pound, and all of the direct materials are.
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23 - 1 Standard Costs and Balanced Scorecard Ex. 212 Hector Company has developed the following standard costs for its product for 2012: HECTOR COMPANY Standard Cost Card Product A Cost ElementStandard Quantity×Standard Price=Standard Cost Direct materials4 pounds$3$12 Direct labor3 hours824 Manufacturing overhead3 hours4  12 $48 The company expected to produce 30,000 units of Product A in 2013 and work 90,000 direct.
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22 - 1 Budgetary Planning and Responsibility Accounting SHORT-ANSWER ESSAY QUESTIONS S-A E  218 The master budget and flexible budgets are important aids to management in performing the management functions of planning and control. Briefly describe how planning and control are facilitated by preparing a master budget and flexible budgets. How are these two.
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23 - 1 Standard Costs and Balanced Scorecard 61.Most companies that use standards set them at a.the normal level. b.a conceivable level. c.the ideal level. d.last year's level. 62.A managerial accountant 1.does not participate in the standard setting process. 2.provides knowledge of cost behaviors in the standard setting process. 3.provides input of historical costs to the standard setting process. a.1 b.2 c.3 d.2 and.
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23 - 1 Standard Costs and Balanced Scorecard 31.In concept, standards and budgets are essentially the same. 32.Standards may be useful in setting selling prices for finished goods. 33.The materials price standard is based on the purchasing department's best estimate of the cost of raw materials. 34.The materials price variance is normally caused by the.
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23 - 1 Standard Costs and Balanced Scorecard Ex. 205 The following direct labor data pertain to the operations of Pearce Corp. for the month of November: Actual labor rate$12.25 per hr. Actual hours used18,000 Standard labor rate$12.00 per hr. Standard hours allowed17,100 Instructions Prepare a matrix and calculate the labor variances. Price VarianceQuantity Variance Total Labor Variance .
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23 - 1 Standard Costs and Balanced Scorecard 111.The investigation of a materials quantity variance usually begins in the a.production department. b.purchasing department. c.sales department. d.controller's department. 112.If the labor quantity variance is unfavorable and the cause is inefficient use of direct labor, the responsibility rests with the a.sales department. b.production department. c.budget office. d.controller's department. 113.Monster Company produces a product requiring.
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22 - 1 Budgetary Planning and Responsibility Accounting COMPLETION STATEMENTS               205.The use of budgets in controlling operations is known as ________________.               206.A major aspect of budgetary control is the use of budget reports that compare _____________________ with _______________________.               207.In analyzing differences from planned objectives, management may take ___________________, or it could decide.
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23 - 1 Standard Costs and Balanced Scorecard 71.  Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight.
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