Standard Costing and Setting Standards

<p>Improved product quality that allows for higher prices. (C)</p> Signup and view all the answers

<p>Decreased sales volume. (B)</p> Signup and view all the answers

<p>A favorable sales price variance may lead to decreased sales volume. (B)</p> Signup and view all the answers

<p>A competitor launches a similar product at a lower price. (D)</p> Signup and view all the answers

<p>The company has increased its selling price, leading to lower sales volume. (D)</p> Signup and view all the answers

<p>Actual materials used were higher quality than the standard, resulting in materials that are easier to work with. (A)</p> Signup and view all the answers

<p>Purchasing higher quality materials. (A)</p> Signup and view all the answers

<p>Price reductions implemented to increase sales volume. (A)</p> Signup and view all the answers

<p>Negotiating a lower hourly rate with a new supplier of labor. (D)</p> Signup and view all the answers

<p>A decrease in the company's overall profit margin. (A)</p> Signup and view all the answers

<p>Negotiating bulk discounts from suppliers. (B)</p> Signup and view all the answers

<p>The supplier offering new trade discounts. (A), Using more highly skilled labor than standard, leading to less material waste. (D)</p> Signup and view all the answers

<p>A significant increase in competitor pricing. (B), Implementation of a strategic pricing strategy to increase market share. (D)</p> Signup and view all the answers

<p>To identify and control costs by comparing actual costs to predetermined standards. (B)</p> Signup and view all the answers

<p>Current Standards (B)</p> Signup and view all the answers

<p>Ideal standards can lead to unrealistic expectations and demotivate employees. (A)</p> Signup and view all the answers

<p>To identify potential cost-saving opportunities and areas for improvement. (D)</p> Signup and view all the answers

<p>A decrease in the quantity of materials used. (D)</p> Signup and view all the answers

<p>To reflect changes in production processes and market conditions. (D)</p> Signup and view all the answers

<p>Attainable standards allow for some level of inefficiency and waste. (D)</p> Signup and view all the answers

<p>Employee training. (B)</p> Signup and view all the answers

<p>(standard hours for the actual output – budgeted hours) × OAR (A)</p> Signup and view all the answers

<p>Actual direct labour hours for actual output and budgeted direct labour hours (C)</p> Signup and view all the answers

<p>The difference between actual and budgeted fixed overheads incurred (A)</p> Signup and view all the answers

<p>Fixed overhead expenditure variance (C)</p> Signup and view all the answers

<p>By purchasing cheaper direct materials than the standard (A)</p> Signup and view all the answers

<p>Corrective actions may affect other variances (A)</p> Signup and view all the answers

<p>Fixed overhead efficiency variance (D)</p> Signup and view all the answers

<p>They help identify areas for further investigation. (D)</p> Signup and view all the answers

<p>To minimize the impact of unfavorable variances on profitability. (A)</p> Signup and view all the answers

<p>When actual direct labor hours are less than standard hours. (D)</p> Signup and view all the answers

<p>Develop a plan to eliminate all variances from occurring in the future. (C)</p> Signup and view all the answers

<p>An unfavorable fixed overhead efficiency variance. (D)</p> Signup and view all the answers

<p>When a supplier increases the price of materials due to inflation. (C)</p> Signup and view all the answers

<p>Actual labour time used was less than the standard time allowed. (C)</p> Signup and view all the answers

<p>Poor quality materials are used. (C)</p> Signup and view all the answers

<p>Actual wage rate is less than the standard wage rate. (A)</p> Signup and view all the answers

<p>More is paid for fixed overheads than was budgeted. (C)</p> Signup and view all the answers

<p>Higher direct labour hours worked than budgeted. (B)</p> Signup and view all the answers

<p>Cost savings on materials leading to better efficiency. (C)</p> Signup and view all the answers

<p>Suppliers passing on cost increases due to inflation. (D)</p> Signup and view all the answers

<p>It may result in favourable variances in labour efficiency. (B)</p> Signup and view all the answers

The difference between actual fixed overheads incurred and budgeted fixed overheads.

The difference between standard hours for actual output and budgeted hours, multiplied by budgeted OAR.

Difference between actual direct labour hours and budgeted direct labour hours, multiplied by budgeted OAR.

Difference between standard direct labour hours and actual direct labour hours for actual output, multiplied by budgeted OAR.

A rate used to allocate fixed overheads based on direct labour or materials.

A method to understand differences between actual figures and budgeted figures.

How correcting one variance can impact others, emphasizing that variances don't operate in isolation.

Insights into why variances occur, prompting management action for corrections.

A method comparing actual costs against budgeted costs for manufacturers.

The difference between actual and standard costs or revenues.

Standards that reflect current conditions and can be achieved.

Standards that can only be achieved under perfect conditions.

Standards based on existing performance levels.

Standards that account for inefficiencies like waste and idle time.

Time when workers are not productive due to downtime.

The difference in actual fixed overhead costs compared to standard costs.

Difference between actual sales amount and budgeted sales amount.

Occurs when actual sales exceed the budgeted amount.

Occurs when actual sales are less than budgeted amount.

Factors leading to better-than-expected sales results, like increased demand or reduced prices.

Factors leading to poorer-than-expected sales, like decreased demand or increased prices.

Difference between actual selling price and budgeted selling price.

Occurs when actual selling price is higher than budgeted.

Occurs when actual selling price is lower than budgeted.

Occurs when selling prices are reduced, impacting revenue negatively.

When actual material used is less than expected, indicating efficiency.

Occurs when actual material used exceeds the budgeted amount.

When the actual materials price is lower than expected, saving costs.

When the actual price of materials exceeds the budgeted price.

Difference between actual materials costs and those budgeted.

Occurs when actual labor costs are lower than budgeted, often due to higher efficiency.

Increase in actual material costs often due to supplier price hikes.

The difference between actual labour hours used and expected standard hours.

When actual labour time is less than standard time allowed.

When actual labour time exceeds the standard time allowed.

The difference between actual wage rate and standard wage rate.

When the actual wage rate paid is less than the standard wage rate.

When the actual wage rate is higher than the standard wage rate.

Actual fixed overhead costs differ from budgeted costs.

Occurs when fewer direct labour hours are worked than budgeted.

Happens when actual hours worked are less than standard hours set.

Arises when actual hours exceed standard hours due to lower skills used.

The largest variances, particularly adverse, that impact business performance.

Steps to analyze significant variances include deciding significance, determining causes, and taking corrective action.