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Questions and Answers
Which of the following best describes standard costs?
Which of the following best describes standard costs?
- Costs associated with a competent management's efficient use of production resources (correct)
- Costs recorded in separate variance accounts
- Costs incurred by a business for paying suppliers and production staff
- Expected costs substituted for actual costs in accounting records
What is the purpose of standard costing?
What is the purpose of standard costing?
- To record variations between expected and actual costs
- To compare what should be accomplished for a normal price and what was actually done at a cost (correct)
- To determine the difference between standard costs and real manufacturing costs
- To substitute expected costs for actual costs in accounting records
What do inventories and cost of products sold accounts contain in a standard cost system?
What do inventories and cost of products sold accounts contain in a standard cost system?
- Standard costs of manufacturing operations (correct)
- Actual expenses incurred by the business
- Variations between expected and actual costs
- Expected costs substituted for actual costs
What do cost variances represent in a standard cost system?
What do cost variances represent in a standard cost system?
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What does a positive balance in a variance account signify?
What does a positive balance in a variance account signify?
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