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Accounting questions: net variance, raw materials, and more

1. If the net variance of a business using standard costing is significant relevant to total production cost, the net variance should be:
a. assigned to cost of goods sold.
b. allocated between work in process, finished goods, and cost of goods sold.
c. carried forward to the next accounting period.
d. none of the above.

2. If it is to be most useful for control purposes, what variance should be reported to the supervisor responsible for the number of pounds of corn syrup used in the manufacture of a candy bar?
a. Raw material price variance, expressed in cents per pound.
b. Raw material usage variance, expressed as a total cost for the month.
c. Raw material usage variance, expressed in total pounds for the month.
d. Raw material usage variance, expressed in total pounds for the week

3. An example of a cost that is noncontrollable in the short run is:
a. raw materials.
b. property taxes.
c. direct labor.
d. supervisors salaries.

4. For performance reports to be most effective for management by exception, they should:
a. show all of the costs associated with the responsibility center being reported about.
b. be issued at the same time for all responsibility centers.
c. be held until the financial statements for the month have been issued.
d. be issued as soon after the activity or period covered as possible

Solution Preview

1. If the net variance of a business using standard costing is significant relevant to total production cost, the net variance should be:
a. assigned to cost of goods sold.
b. allocated between work in process, finished goods, and cost of goods sold.
c. carried forward to the next accounting period.
d. none of the above.

Response: If it is small, you just adjust COGS. If it is big, you allocate to ending inventories and COGS. Pick B.

2. If it is to be most useful for ...

Solution Summary

A sentence explains each choice.

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