Chapter 10 - Standard Costing

Question 1

What are Quantity standards?

Answer 1

specify how much of an input should be used to make a product or provide a service.

Question 2

What are Cost (price) standards?

Answer 2

Cost (price) standards specify how much should be paid for each unit of the input.

Question 3

How to set standards in a company?

Answer 3

Accountants, engineers, purchasing agents, and production managers combine efforts to set standards that encourage efficient future production

Question 4

What is Price Variance?

Answer 4

Difference between actual price and standard price

Question 5

What is quantity variance?

Answer 5

Difference between actual quantity and standard quantity

Question 6

What is the difference between Ideal or Attainable standards?

Answer 6

Ideal or Attainable = Perfect or “real condition”

Ideal kan vara receptet på chokladbaren exempelvis. Perfekta situationer.

Companys tends to set it more to Attainable.

Question 7

Which statement applies to ideal standards?

A) Can be achieved only if everything operates perfectly.

B) Allow for machine breakdowns, slack, or lack of momentary skill.

C) Demand minimum efficiency.

D) Can be achieved under efficient operations.

Answer 7

A) Can be achieved only if everything operates perfectly.

Question 8

Which of the following are sources of quantity standards?

A) benchmarks

B) budget studies

C) input from interested personnel

D) historical experience

Answer 8

D) historical experience

Question 9

Which of the following standards are based on the amount of input that should be used per unit of output?

A) quantity standards

B) kaizen standards

C) ideal standards

D) price standards

Answer 9

A) quantity standards

Question 10

What do variances indicate?

A) when the variance should be investigated

B) the cause of the variance

C) who is responsible for the variance

D) that actual performance is not going according to plan

Answer 10

D) that actual performance is not going according to plan