ACCA AK Management Accounting (MA) Standard Costing and Variance Analysis 3

Question 1

In a standard costing operating statement, what is the typical starting point?

Accepted Answer

Budgeted profit (or contribution)

Answer

Actual profit for the period

Answer

Standard profit for actual output

Answer

Actual revenue for the period

Question 2

Which department is typically held responsible for an adverse direct material price variance?

Accepted Answer

Purchasing department

Answer

Production department

Answer

Human resources department

Answer

Finance department

Question 3

Which of the following is most likely to cause a favourable direct labour efficiency variance?

Accepted Answer

Workers using a higher-grade material that is easier and faster to process

Answer

Workers being paid an overtime premium rate

Answer

A general wage rate increase agreed with trade unions

Answer

An increase in the purchase price of raw materials

Question 4

What does an idle time variance represent?

Accepted Answer

The cost of hours paid to workers during which no production occurred

Answer

The cost of unsold finished goods held in closing inventory

Answer

The difference between budgeted and actual machine downtime charges

Answer

The variance caused by inefficient use of direct materials

Question 5

The purpose of splitting variances into planning and operational components is to:

Accepted Answer

Separate variances caused by poor original planning from those caused by operational performance

Answer

Eliminate all variances by revising the standard every month to match actuals

Answer

Allocate responsibility for all variances equally between all departments

Answer

Replace standard costing with activity-based costing in modern businesses

Question 6

If actual profit exceeds budgeted profit, what must be true of the net total of all variances for the period?

Accepted Answer

The net total of all variances must be favourable

Answer

The net total of all variances must be adverse

Answer

The net total must be zero as the budget should always balance

Answer

The variances are immaterial and can be ignored

Question 7

A company uses attainable standards. This means the standards:

Accepted Answer

Can be achieved by an efficient and motivated workforce under normal working conditions

Answer

Assume perfect efficiency with absolutely no waste or machine downtime

Answer

Are based solely on last year's actual average results without adjustment

Answer

Remain fixed and unchanged over many accounting periods regardless of changes