Standard Costing (1) Flashcards

1
Q

What is a standard cost?

A

An estimated unit cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

How is a standard prepared?

A

By management in advance and details their expectations of the future

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is standard costing?

A

Involves establishment of predetermined estimates of the costs of products or services, collection of actual costs and comparison of actual costs with predetermined estimates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are predetermined costs known as?

A

Known as standard costs and the difference between standard and actual cost is known as variance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is variance analysis?

A

The process by which the total difference between stadnard and actual cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Standard costing (decision making)

A

Prediction of costs and times for decision maknig (e.g. allocating resources)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Standard costing (setting budgets)

A

Standard costing is used in setting budgets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Standard costing (variance analysis)

A

A control technique which compares actual with standard costs and revenues

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Standard costing (performance evaluation)

A

Performance evaluation systems make use of standards as motivators and as a basis for assessment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Standard costing (Inventory valuation)

A

Often less time consuming than alternative valuation method such as FIFO or weighted average

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Standard costing (Management by exception)

A

Enable principle of “management by exception” to be practiced

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Where should standard costing be used?

A

If there is a large amount of repetition in the production process so average or expected usage of resources can be determined

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Standard costing well-suited vs less-suited/

A

Well suited: Mass production and repetitive assembly work

Less suited: Where items are manufactured to customer demand and specifications

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

How should responsibility for deriving standard costs be shared?

A

Between managers who are able to provide the necessary information about levels of expected efficiency, prices and overhead costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How are standard cost of materials estimated?

A

By the purchasing department

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is an ideal standard?

A

A standard which can be attained under perfect operating conditions, no wastage inefficiencies idle time breakdowns

17
Q

What is an attainable standard?

A

Attained if production is carried out efficiently, machines are properly used and materials properly used. Some allowance for wastage and inefficiencies

18
Q

What is a current standard?

A

Standard based on current working conditions

19
Q

What is a basic standard?

A

A long-term standard which remains unchanged over the years and is used to show trends