50+ Standard Costing MCQ | Cost Accounting MCQs (Free Resource)
Standard Costing MCQ
1. The objective of standard costing is to
(a) Determine profitability of a product
(b) Determine break-even production level
(c) Control costs
(d) Allocate costs with more accuracy
2. A standard cost system may be used in
(a) job order costing, but not process costing
(b) process costing, but not job order costing
(c) either job order costing or process costing
(d) neither job order costing nor process costing
3. An estimate of what cost should be is known as
(a) Actual cost
(b) Ideal cost
(c) Standard cost
(d) Forecast cost
4. A standard cost is
(a) the total amount that appears on the budget for product costs
(b) a pre-determined cost which is calculated from management standards of efficient operation
(c) the total number of units x the cost expected
(d) any amount that appears on a budget
5. Which of the following best describes a basic standard?
(a) A standard set at an ideal level, which makes no allowance for normal losses, waste and machine downtime
(b) A standard that assumes an efficient level of operation, but which includes allowances for factors such as normal loss, waste, and machine downtime
(c) A standard that is kept unchanged over a long period of time
(d) A standard that is based on current price levels
6. A standard which assumes efficient level of operations, but which includes allowance for factors such as waste and machine downtime is known as an
(a) Ideal standard
(b) Normal standard
(c) Attainable standard
(d) Neither (a) nor (b) nor (c)
7. What standard is based on the assumption of most favourable conditions possible ?
(a) Ideal Standard
(b) Normal Standard
(c) Expected Standard
(d) Attainable Standard
8. The standard cost card contains quantities and costs for
(a) direct material only
(b) direct labour only
(c) direct material and direct labour only
(d) direct material, direct labour, and overhead
9. Which one of the following does NOT accurately describe one of the ways in which standards are developed?
(a) Standard material quantities may be determined by engineering studies
(b) Supplier price lists may be used to determine standard prices of materials
(c) Time and motion studies are sometimes used to determine labour efficiency standards
(d) Employee time cards are often used to determine standard labour wage rates
10. What term can be defined as a means of assessing the difference between a predetermined amount and the actual amount?
(a) Variance analysis
(b) Differential costing
(c) Incremental costing
(d) Marginal Costing
| Answers: 1)Determine profitability of a product 2)either job order costing or process costing 3)Ideal cost 4)any amount that appears on a budget 5)A standard that is based on current price levels 6)Attainable standard 7)Ideal Standard 8)direct material, direct labour, and overhead 9)Employee time cards are often used to determine standard labour wage rates 10)Variance analysis |
11. A total cost variance is best defined as the difference between
(a) total standard cost for the last year and total standard cost in the current year
(b) total standard cost for the last year and total actual cost in the current year
(c) the standard cost value of output budgeted in a period and the total actual cost incurred
(d) the standard cost value of output achieved in a period and the total actual cost incurred
12. If standard cost is lower than the actual cost, the difference is known as
(a) Favourable
(b) Adverse
(c) Positive
(d) Negative
13. A favourable variance occurs when
(a) actual costs are less than marginal costs
(b) standard costs are less than actual costs
(c) actual costs are less than the selling price
(d) actual costs are less than standard costs
14. The “standard quantity allowed” is computed by multiplying the :
(a) actual input in units by the standard output allowed
(b) actual output in units by the standard input allowed
(c) actual output in units by the standard output allowed
(d) standard output in units by the standard input allowed
15. The difference between the actual price and the standard price, multiplied by the actual quantity of materials purchased is the
(a) materials cost variance
(b) materials usage variance
(c) materials price variance
(d) materials efficiency variance
16. The difference between the actual quantity and the standard quantity, multiplied by the standard price is the
(a) materials efficiency variance
(b) materials volume variance
(c) materials price variance
(d) materials usage variance
17. Which of the following is correct with regard to using the standard quantity to compute materials variances?
Standard quantity is used –
(a) Materials Price Variance: Yes; Materials Usage Variance: No
(b) Materials Price Variance: Yes; Materials Usage Variance: Yes
(c) Materials Price Variance: No; Materials Usage Variance: No
(d) Materials Price Variance: No; Materials Usage Variance: Yes
18. Which of the following is correct with regard to using the standard unit price to compute materials variances?
Standard unit price used –
(a) Materials Price Variance: Yes; Materials Usage Variance: No
(b) Materials Price Variance: Yes; Materials Usage Variance: Yes
(c) Materials Price Variance: No; Materials Usage Variance: No
(d) Materials Price Variance: No; Materials Usage Variance: Yes
19. The term “standard hours allowed” measures
(a) budgeted output at actual hours
(b) budgeted output at standard hours
(c) actual output at standard hours
(d) actual output at actual hours
20. The labour rate variance is computed as :
(a) (Actual labour hours worked – Standard labour hours allowed) x Actual labour rate
(b) (Actual labour hours worked – Standard labour hours allowed) x Standard labour rate
(c) (Actual labour rate – Standard labour rate) x Standard hours allowed
(d) (Actual labour rate – Standard labour rate) x Actual hours worked
| Answers: 11)the standard cost value of output achieved in a period and the total actual cost incurred 12)Adverse 13)actual costs are less than standard costs 14)actual output in units by the standard input allowed 15)materials price variance 16)materials usage variance 17)Materials Price Variance: No; Materials Usage Variance: Yes 18)Materials Price Variance: Yes; Materials Usage Variance: Yes 19)actual output at standard hours 20)(Actual labour rate – Standard labour rate) x Actual hours worked |
21. If the actual number of labour hours worked is less than the standard labour hours allowed for equivalent units produced, this indicates :
(a) An unfavourable labour rate variance
(b) A favourable total labour variance
(c) An unfavourable labour efficiency variance
(d) A favourable labour efficiency variance
22. Which of the following is correct with regard to the standard labour hours being used to compute labour variances ?
Standard labour hours used :
(a) Labour Rate Variance: Yes; Labour Efficiency Variance: No
(b) Labour Rate Variance: Yes; Labour Efficiency Variance: Yes
(c) Labour Rate Variance: No; Labour Efficiency Variance: No
(d) Labour Rate Variance: No; Labour Efficiency Variance: Yes
23. Which of the following is correct with regard to using the standard labour rate to compute labour variances? Standard labour rate used:
(a) Labour Rate Variance: Yes; Labour Efficiency Variance: No
(b) Labour Rate Variance: Yes; Labour Efficiency Variance: Yes
(c) Labour Rate Variance: No; Labour Efficiency Variance: No
(d) Labour Rate Variance: No; Labour Efficiency Variance: Yes
24. What is the primary benefit of a standard costing system?
(a) It records costs at what should have been incurred
(b) It allows for a comparison of differences between actual and standard costs
(c) It is easy to implement
(d) It is inexpensive and easy to use
25. The standard which can be attained under the most favourable conditions possible
(a) Ideal Standard
(b) Expected Standard
(c) Current Standard
(d) Normal Standard
26. A standard which is established for use unaltered for an indefinite period is called
(a) Current standard
(b) Ideal standard
(c) Basic standard
(d) Expected standards
27. Which of the following is not a type of standard, conceptually speaking?
(a) Ideal standards
(b) Negative standards
(c) Expected standards
(d) Current standards
28. Which of the following statements about ideal standards is false?
(a) It is called theoretical or maximum efficiency standard
(b) These are standard costs that are set for production under optimal condition
(c) It makes no allowance for wastage, spoilage and machine breakdowns
(d) It can be used for cash budgeting or product costing
29. The cost of product as determined under standard cost system is
(a) Fixed cost
(b) Historical cost
(c) Direct cost
(d) Predetermined cost
30. The amount of work achievable in an hour, at standard efficiency levels, is
(a) an ideal standard
(b) the direct labour usage per hour
(c) a standard hour
(d) the direct labour efficiency variance
| Answer: 21)A favourable labour efficiency variance 22)Labour Rate Variance: No; Labour Efficiency Variance: Yes 23) Labour Rate Variance: Yes; Labour Efficiency Variance: Yes 24)It allows for a comparison of differences between actual and standard costs 25)Ideal Standard 26)Basic standard 27)Negative standards 28)It can be used for cash budgeting or product costing 29)Predetermined cost 30)a standard hour |
31. While computing variances from standard costs, the difference between the actual and the standard prices multiplied by the actual quantity yields a
(a) Yield variance
(b) Volume variance
(c) Mix variance
(d) Price variance
32. While evaluating deviations of actual cost from standard cost, the technique used is
(a) Regression analysis
(b) Variance analysis
(c) Linear progression
(d) Trend analysis
33. Which of the following statements is/are true?
(i) The standard cost per unit of materials is used to calculate a materials price variance
(ii) The standard cost per unit of materials is used to calculate a materials usage variance
(iii) The standard cost per unit of materials cannot be determined until the end of the period
(a) Only (i) above
(b) Only (ii) above
(c) Only (iii) above
(d) Both (i) and (ii) above
34. The labour cost variance may be expressed as
(a) Budgeted labour cost – Actual labour cost
(b) (Standard wage rage x Output achieved) – Actual wage cost
(c) (Standard hours – Actual hours) x Actual wage rate
(d) (Standard hours – Actual hours) x Standard wage rate
35. Which of the following statements is/are true?
(i) The standard direct labour hours per unit of output is used to calculate a labour rate variance
(ii) The standard direct labour hours per unit of output is used to calculate a labour efficiency variance
(iii) The standard direct labour hours per unit of output cannot be determined until the end of the period
(a) Only (i) above
(b) Only (ii) above
(c) Only (iii) above
(d) Both (i) and (ii) above
36. Which of the following is a purpose of standard costing?
(a) To determine profit at different levels
(b) To determine break-even production level
(c) To control costs
(d) To allocate cost with more accuracy
37. Which of the following best describes a basic standard?
(a) A standard set at an ideal level, which makes no allowance for normal losses, waste and machine downtime.
(b) A standard which assumes an efficient level of operation, but which includes allowances for factors such as normal loss, waste and machine downtime.
(c) A standard which is kept unchanged over a period of time.
(d) A standard which is based on current price levels.
38. Actual units of direct materials used were 20,000 at an actual cost of Rs 40,000. Standard unit cost is Rs 2.10. Assuming the materials price variance is recognized when the materials are used, the materials price variance (MPV) is:
(a) Rs 1,000 favourable
(b) Rs 1,000 unfavourable
(c) Rs 2,000 favourable
(d) Rs 2,000 unfavourable
39. If material cost variance is Rs 9,400 (favourable) and material usage variance is Rs 8,200 (adverse), then material price variance (MPV) is
(a) Rs 5,600 (favourable)
(b) Rs 5,600 (adverse)
(c) Rs 6,400 (favourable)
(d) Rs 17,600 (adverse)
(e) Rs17,600 (favourable)
40. The actual materials price (AP) was Rs 3.50, the actual quantity (AQ) of material was 5,100 units, and the materials price variance (MPV) was 1,275 unfavourable. The standard materials price (SP) was :
(a) Rs 3.75
(b) Rs 3.30
(c) Rs 3.00
(d) Rs 3.25
| Answer: 31)Price variance 32)Variance analysis 33)Both (i) and (ii) above 34)(Standard wage rage x Output achieved) – Actual wage cost 35)Only (ii) above 36)To control costs 37)A standard which is kept unchanged over a period of time. 38)Rs 2,000 favourable 39)Rs17,600 (favourable) 40)Rs 3.25 |
41. During the month of December 2013, XLNT Ltd. used 5,000 kgs of materials at a total standard cost of Rs 20,000. The material usage variance was Rs 360 (adverse). The standard usage of material (SQ) for the period is
(a) 4,000 kgs
(b) 4,910 kgs
(c) 5,000 kgs
(d) 5,850 kgs
(e) 6,340 kgs
42. The standard units (SQ) were 5,200, the standard price (SP) was Rs 3.25, and the materials quantity variance (MQV) was Rs 325 favourable. The actual units (AQ) were:
(a) 5,300
(b) 5,000
(c) 5,100
(d) 5,200
43. Last month 27,000 direct labour hours were worked at an actual cost of Rs 2,36,385 and the standard direct labour hours of production were 29,880. The standard direct labour cost per hour was Rs 8.50. What was the labour efficiency variance (LEV)?
(a) Rs 17,595 Adverse
(b) Rs 17,595 Favourable
(c) Rs 24,480 Adverse
(d) Rs 24,480 Favourable
44. Consider the following data pertaining to Roy Ltd. for the month of June 2014 :
Actual direct labour hours – 27,600
Standard direct labour hours – 28,000
Total direct labour cost (Rs) – 1,93,200
If direct labour efficiency variance is ` 2,560 (favourable), the direct labour rate variance (LRV) is
(a) Rs 12,252 Adverse
(b) Rs 15,560 Adverse
(c) Rs 15,560 Favourable
(d) Rs 16,560 Adverse
(e) Rs 16,560 Favourable
45. The standard hourly rate was Rs 1.40. The actual rate was Rs 1.30. The labour rate variance was Rs 600, favourable. The actual labour hours (AH) were:
(a) 6,000
(b) 6,400
(c) 1,000
(d) 1,500
46. A Ltd. used 4,538 kgs of material at a standard cost of Rs 2.50 per kg. The material usage variance was Rs 280 (Favourable). The standard usage of material for the period is
(a) 4,700 kgs
(b) 4,650 kgs
(c) 4,600 kgs
(d) 4,588 kgs
47. During the month of September 2010, 7,800 kg. of material was purchased at a total cost of Rs 16,380. The stocks of material increased by 440 kg. It is the company’s policy to value the stocks at standard purchase price. If the material price variance was Rs 1,170 (Adverse), the standard price per kg. of material is
(a) Rs 1.95
(b) Rs 2.10
(c) Rs 2.23
(d) Rs 2.25
48. The standard and the actual requirements of material of a company are as under :
Standard – 2,400 units at the rate of Rs 20 per unit
Actual – 2,600 units at the rate of 19 per unit
The material cost variance is
(a) Rs 2,600 (Adverse)
(b) Rs 1,400 (Favourable)
(c) Rs 2,400 (Adverse)
(d) Rs 1,400 (Adverse)
49. Last month 27,000 direct labour hours were worked at an actual cost of Rs 2,36,385 and the standard direct labour hours of production were 29,880. The standard direct labour cost per hour was Rs 8.50.
What was the labour efficiency variance?
(a) Rs 17,595 Adverse
(b) Rs 17,595 Favourable
(c) Rs 24,480 Adverse
(d) Rs 24,480 Favourable
50. In the four week production period just completed, B Ltd. produced 570 units. The standard labour cost for each unit was Rs 13.50, based on budgeted production of 550 units. The actual labour cost for the period was Rs 8,238.
What was the labour rate variance for the period?
(a) Rs 543 adverse
(b) Rs 543 favourable
(c) Rs 813 adverse
(d) Rs 813 favourable
| Answer: 41)4,910 kgs 42)5,100 43)Rs 24,480 Favourable 44)Rs 16,560 Adverse 45)6,000 46)4,650 kgs 47)Rs 1.95 48)Rs 1,400 (Adverse) 49)Rs 24,480 Favourable 50)Rs 543 adverse |
Q. NO. 5 3RD ANSWER HOGA