Standard Costing MCQs

Share on facebook
Share on twitter
Share on linkedin
Share on pinterest
Share on reddit

SHARE THIS

A standard cost is a predetermined unit cost based on expected direct materials quantities and expected direct labour time, and priced at a
Standard Costing MCQs

Standard Costing MCQs

A standard cost is a predetermined unit cost based on expected direct materials quantities and expected direct labour time, and priced at a predetermined rate per unit of direct materials and rate per direct labour hour and rate per hour of overhead. Here on MCQs.club we have designed Multiple Choice Questions (MCQs) on Standard costing that covers the meaning/definition/accounting/types of standard costing with examples. These MCQs are helpful for Professional accounting exams and competitive exams.

  1. A standard cost is a carefully ____________ unit cist which is prepared for each cost unit.
    1. Pre-determined
    2. Absorbed
    3. Apportioned
    4. None
  2. Which of the following statement is correct?
    1. Standard cost is an estimated or predetermined cost of performing an operation or producing a good or service, under normal conditions.
    2. Standard costing is a control technique that reports variances by comparing actual costs to pre-set standards so facilitating action through management by exception.
    3. Both A&B
    4. None
  3. A standard cost is a predetermined unit cost based on expected direct materials quantities and expected direct labour time, and priced at a predetermined rate per unit of direct materials and rate per direct labour hour and rate per hour of overhead.
    1. The above statement is correct
    2. The above statement is incorrect
  4. The standard becomes a target against which performance can be measured.
    1. True
    2. False
  5. The difference between the standard and the actual is known as a: ______.
    1. Abnormal loss
    2. Abnormal gain
    3. Variance
    4. None
  6. The main purposes of standard costs include:
    1. Control and performance measurement
    2. To value inventories
    3. To simplify accounting
    4. All of the above
  7. A ___________ shows full details of the standard cost of each product.
    1. Job cost card
    2. Standard cost card
    3. Time sheet
    4. None
  8. Uses of standard costing include:
    1. It is an alternative system of cost accounting. In a standard costing system, all units produced are recorded at their standard cost of production.
    2. When standard costs are established for products, they can be used to prepare the budget.
    3. It is a system of performance measurement.
    4. It is also a system of control reporting
    5. All of the above
  9. Standard costing is most suited to organizations with:
    1. Mass production of homogenous products
    2. Repetitive assembly work
    3. Both A&B
    4. None
  10. Standard costing is less suited to organizations that produce non-homogenous products or where the level of human intervention high.
    1. False
    2. True
  11. Identify the factors that differentiate standard costing from other approaches to budgetary control.
    1. Under standard costing, for costing purposes all stocks are valued at their standard costs.
    2. Standard costs are incorporated in the ledger accounts; budgets are a memorandum record outside the ledger accounts.
    3. Standard costs are set as unit costs; budgets tend to be set as total costs.
    4. All of the above
  12. From the following identify types of standard.
    1. Basic standards, Ideal standards
    2. Attainable standards, Current standards
    3. Both A&B
    4. None
  13. A basic standard is ‘a standard established for use over a long period from which a current standard can be developed’. Such standards do not change from year to year.
    1. The above statement is correct
    2. The above statement is incorrect
  14. Ideal standards make no allowances for normal losses, waste and machine downtime.
    1. True
    2. False
  15. While setting of standards, which of the following aspects should management keep in mind?
    1. Their value for control
    2. Their motivational effect
    3. Their usefulness for planning purposes
    4. All of the above
  16. In general, a standard cost will be set for each product, comprising:
    1. Direct materials: standard quantity (kgs, liters etc.) x standard price per unit
    2. Direct wages: standard labour hours x standard hourly rate
    3. Variable overhead: standard hours (labour or machine) x standard rate per hour
    4. Fixed overhead: budgeted overhead for the period x budgeted standard hour (labour or machine)
    5. All of the above
  17. Standard costing may be used with either a system of absorption costing or a system of marginal costing.
    1. True
    2. False
  18. How often should standards be revised? From the following identify the reasons why standards should be revised regularly.
    1. Regular revision leads to standards which are meaningful targets that employees may be motivated to achieve (for example, through incentive schemes).
    2. Variance analysis is more meaningful because reported variances should be realistic.
    3. In practice, standards are normally reviewed annually. Standards by their nature are long-term averages and therefore some variation is expected over time. The budgeting process can therefore be used to review the standard costs in use.
    4. All of the above
  19. Idle time occur when the direct labour employees are being paid but have no work to do. The causes of idle time may be:
    1. A breakdown in production, for example a machine breakdown that halts the production process.
    2. Time spent waiting for work due to a bottleneck or hold-up at an earlier stage in the production process.
    3. Running out of a vital direct material, and having to wait for a new delivery of the materials from a supplier.
    4. A lack of work to do due to a lack of customer orders.
    5. All of the above
  20. What ways of allowing for idle time in a standard cost is used?
    1. Include idle time as a separate element of the standard cost, so that the standard cost of idle time is a part of the total standard cost per unit.
    2. Allow for a standard amount of idle time in the standard hours per unit for each product. The standard hours per unit therefore include an allowance for expected idle time.
    3. Both A&B
    4. None

Leave a Reply

Sign up for Free MCQs

MCQs Club

Log in to continue. IT'S FREE

OR

Don’t have an account? Sign up