Question 1

A company must choose either a standard system or nonfinancial performance measures to evaluate the performance of a company.

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Question 2

Volume variance measures the use of fixed factory overhead resources.

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Question 3

The principle of exceptions allows managers to focus on correcting variances between

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Question 4

Standards that represent levels of operation that can be attained with reasonable effort are called

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Question 5

Nonfinancial performance output measures are used to improve the input measures.

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Question 6

Standard costs are a useful management tool that can be used solely as a statistical device apart from the ledger or they can be incorporated in the accounts.

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Question 7

An example of a nonfinancial measure is the number of customer complaints.

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Question 8

Which of the following conditions normally would not indicate that standard costs should be revised?

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Question 9

A company should only use nonfinancial performance measures when financial measures cannot be calculated.

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Question 10

An unfavorable fixed factory overhead volume variance may be due to a failure of supervisors to maintain an even flow of work.

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Question 11

Standard cost variances are usually not reported in reports to stockholders.

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Question 12

Favorable fixed factory overhead volume variances are never harmful, since achieving them encourages managers to run the factory above normal capacity.

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Question 13

The most effective means of presenting standard factory overhead cost variance data is through a factory overhead cost variance report.

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Question 14

Since the controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable.

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Question 15

At the end of the fiscal year, the variances from standard are usually transferred to the finished goods account.

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Question 16

Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits for using standard costs?

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Question 17

Though favorable fixed factory overhead volume variances are usually good news, if inventory levels are too high, additional production could be harmful.

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Question 18

The standard price and quantity of direct materials are separated because

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Question 19

Periodic comparisons between planned objectives and actual performance are reported in:

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Question 20

Nonfinancial measures are often linked to the inputs or outputs of an activity or process.

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Quiz 8: Evaluating Variances From Standard Costs