True/False (1 Point Each) icate whether the statement is true or false. Standard

Question

True/False (1 Point Each) icate whether the statement is true or false. Standard costs serve as a device for measuring efficiency 1. 2. Standard costs can be used with both the process cost and job order cost systems. 3. Cost systems using detailed estimates of each element of manufacturing cost entering into the finis product are called budgeted cost systems Financial reporting systems that are guided by the principle of exceptions concept focus attent variances from standard costs. 4. 5. In most businesses, cost standards are established principally by accountants. 6. Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no 7. Currently attainable standards do not allow for reasonable production difficulties 8. The fact that workers are unable to meet a properly determined direct labor standard is sufficient cause to materials spoilage change the standard. nges in technology, machinery, or production methods may make past cost data irelevant when setting standards 10. The difference between the standard cost of a product and its actual cost is called a variance. 11. Standards are performance goals used to evaluate and control operations 12. Standards are set for only direct labor and direct materials. 13. Becase accontant rt production area. A budget performance report compares actual results with the budgeted amounts and reports differences for possible investigation. 14. 15. A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes. 16. An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost. 17. Standards are desgned to evaluate price and quantity variances separately

Explanation / Answer

True/False:

1. True

Standard costs refers to the estimated cost of a process/ resource/ item that is used in a manufacturing company, entered in an account and it is compared with the actual cost so that anomalies are readily detectable hence ensuring efficiency.

2. True

Standard costing can be used for both job order and process costing systems.

3. False

Cost systems which uses detailed estimates of each & every element of manufacturing cost which isentered into the finished product is referred as standard cost systems and not budget cost systems.

4. True

Financial reporting systems focuses attention on variances from standard cost which are guided by the principle of exceptions concept.

5. False

In most businesses, cost standards are established principally by managment.

6. True

Ideal standards are being developed under certain conditions which assumes that there is nil idle time, machine is breakdowns, and there are no materials spoilage.

7. False

Currently attainable standards allows for reasonable production difficulties.

8. False

Workers are not able to meet a the determined direct labor standard, this fact is not a sufficient cause to change the standard.

9. True

Technological change, change in plant & machinery, or the change in production methodology makes earlier cost data irrelevant when standards are set.

10. True

variance refers to the difference between the standard cost of a material and its actual cost incurred.

11. True

Standards are performance goals used to evaluate and control operations.

12. False

Standards are not set for only direct labor and direct materials.

13. False

Accountants have financial expertise cannot be the only reason that they are the only ones that are should set standard costs.

14. True

A budget performance report actual results are compared with budgeted amounts and the differences in reports amounts for possible investigation.

15. True

A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.

16. False

Unfavorable variance occurs where actual costs are greater than the standard or expected costs.

17. True

Standards are used for the evaluation of price and quantity variances separately

18. True

Standard costs are calculated by multiplication of expected price by expected quantity

19. True

Efficiency of the direct labor force can be measured by the direct labor time variance.

20. True

Controllable variances measures the efficiency of using the various variable overhead resources, if budgeted variable overhead is more than actual results, then the variance wil be favorable.

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