Standard costing and variance analysis - material and labour variances, activity based costing - One Line Questions

1. Material Cost Variance (MCV) is the difference between the standard cost of materials for the actual output and the actual cost of materials used. What is the formula for MCV? — (Standard Price × Standard Quantity) - (Actual Price × Actual Quantity)
2. Material Usage Variance (MUV) measures the difference between the standard quantity of material allowed for the actual output and the actual quantity of material used. What is the formula for MUV? — (Standard Quantity - Actual Quantity) × Standard Price
3. Material Price Variance (MPV) measures the difference between the standard price of material and the actual price paid for the quantity purchased or used. What is the formula for MPV? — (Actual Price - Standard Price) × Actual Quantity
4. What is the formula for Idle Time Variance? — (Standard Rate × Actual Idle Hours)
5. Labour Cost Variance (LCV) is the difference between the standard labour cost for the actual output and the actual labour cost incurred. What is the formula for LCV? — (Standard Rate × Standard Hours) - (Actual Rate × Actual Hours)
6. Labour Efficiency Variance (LEV) measures the difference between the standard hours allowed for the actual output and the actual hours worked. What is the formula for LEV? — (Standard Hours - Actual Hours) × Standard Rate
7. Labour Rate Variance (LRV) measures the difference between the standard labour rate and the actual labour rate paid for the hours worked. What is the formula for LRV? — (Actual Rate - Standard Rate) × Actual Hours
8. Actual labour hours worked were 500 hours at $12/hour. Standard labour rate was $10/hour. The Labour Rate Variance is: — $1000 Adverse
9. Standard cost per unit = Standard material price × Standard material quantity per unit. If standard material price is $5/kg and standard quantity is 2 kg/unit, the standard material cost per unit is: — $10
10. Standard quantity of material allowed for 50 units is 100 kg. Actual output was 60 units, and actual material used was 110 kg. Standard price is $2/kg. The Material Usage Variance is: — $20 Favorable
11. Standard material price is $10/kg. Actual material purchased was 200 kg at $11/kg. The Material Price Variance is: — $200 Adverse
12. Standard labour rate is $15/hour. Actual hours worked for a task were 100 hours, but standard hours allowed were 80 hours. The Labour Efficiency Variance is: — $300 Adverse
13. If standard labour hours allowed for 10 units is 5 hours, and actual output is 20 units, the standard labour hours allowed for actual output is: — 10 hours
14. The standard quantity of material allowed for a batch of 100 units is 50 kg. If 120 units are produced, the standard quantity allowed for actual output would be: — 60 kg
15. What is a 'cost driver' in the context of Activity-Based Costing? — A measure of the amount of an activity that is consumed by a product
16. An adverse Labour Efficiency Variance occurs when: — Actual hours worked are more than standard hours allowed
17. An adverse Material Price Variance occurs when: — Actual price is higher than standard price
18. A favorable Material Usage Variance occurs when: — Actual quantity used is less than standard quantity
19. A favorable Labour Rate Variance occurs when: — Actual rate paid is lower than standard rate
20. If the actual quantity of material used is less than the standard quantity allowed for the output, the Material Usage Variance is: — Favorable
21. Which of the following is a 'support-level' activity in ABC? — General factory administration
22. In ABC, overhead costs are allocated to products based on: — Consumption of activities
23. If the actual rate paid to labour is higher than the standard rate, the Labour Rate Variance is: — Adverse
24. ABC is particularly useful for companies with: — Many products and high overheads
25. A 'batch-level' activity in ABC is an activity that is performed: — For each batch of product
26. If a company uses Activity-Based Costing, the cost of a product is likely to be higher if it: — Requires complex setups
27. The purpose of calculating both Labour Efficiency Variance and Labour Rate Variance is to: — Isolate the impact of labour hours from labour cost
28. The purpose of calculating both Material Usage Variance and Material Price Variance is to: — Isolate the impact of material quantity from material cost
29. Which of the following is NOT a type of labour variance? — Labour Mix Variance
30. Idle Time Variance is a part of which other variance? — Labour Cost Variance
31. Which type of variance is calculated to reconcile the difference between the standard hours allowed for actual output and the hours paid for, at the standard rate? — Labour Idle Time Variance
32. Which variance helps in identifying whether workers were more or less productive than expected? — Labour Efficiency Variance
33. The total Labour Cost Variance is the sum of: — Labour Rate Variance and Labour Efficiency Variance
34. In ABC, which cost pool is typically associated with the number of times a production run is started? — Machine Setup
35. Which of the following is a 'unit-level' activity in ABC? — Drilling holes in a product
36. Which of the following is NOT a type of material variance? — Material Yield Variance
37. Which variance helps in identifying inefficiencies in the use of materials? — Material Usage Variance
38. If the standard mix of materials is A:B = 2:1, and actual mix used is A:B = 1:1, this would primarily affect which variance? — Material Mix Variance
39. The total Material Cost Variance is the sum of: — Material Price Variance and Material Usage Variance
40. Which variance is calculated to measure the difference between the standard cost of actual output and the actual cost of materials purchased, considering both price and quantity effects? — Material Cost Variance
41. Which of the following is a common cost driver for an 'Order Processing' activity in ABC? — Number of customer orders
42. In Activity-Based Costing, costs are first traced to: — Activities
43. The primary goal of variance analysis is to: — Identify deviations from standards and investigate their causes
44. The main advantage of ABC over traditional costing is: — More accurate allocation of overhead costs
45. What is the primary purpose of standard costing? — To establish a benchmark for cost control and performance evaluation
46. Activity-Based Costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. — True
47. An organisation using ABC may find that high-volume products are: — Over-costed
48. An organisation using ABC may find that low-volume, high-complexity products are: — Under-costed
49. Which of the following is a potential disadvantage of Activity-Based Costing? — High implementation and maintenance costs
50. An adverse Idle Time Variance indicates: — Workers were idle for more than the standard allowed idle time
All One Line Questions
E-Book Standard costing and variance analysis - material and labour variances, activity based costing Online Test Standard costing and variance analysis - material and labour variances, activity based costing Question Bank Standard costing and variance analysis - material and labour variances, activity based costing