Standards Setting in Planning, Budgeting and Forecasting

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Which factor is determined first when setting direct materials standards?

Price

Quality (correct)

Quantity

Management's estimates of demand

What should direct labor standards be adjusted for?

Expected breaks, downtime, and spoilage (correct)

Learning and productivity factors

Quality of the workforce

Amount and price of labor cost

What is a key consideration in developing direct materials standards?

Allowing for losses, spoilage, scrap, and waste (correct)

Alignment with management's estimates of demand

Setting price to align with company strategy

Selecting vendors in the supply chain

How can direct labor standards be aligned with the strategic goals of a company?

By determining the quality of the workforce Signup and view all the answers

What should be factored into standard setting and variance analysis for direct labor?

Productivity and learning Signup and view all the answers

Why are direct materials standards determined first before quantity and price?

To allow for losses, spoilage, scrap, and waste Signup and view all the answers

Which of the following is the most accurate way of determining standard costs according to the text?

Activity analysis Signup and view all the answers

In the context of determining standard costs, which method is most expensive to implement according to the text?

Activity analysis Signup and view all the answers

What is a disadvantage of using historical data to determine standard costs as mentioned in the text?

Less reliable than activity analysis Signup and view all the answers

Benchmarking can help a firm maintain its competitive edge. What kind of data does benchmarking typically involve?

External industry data Signup and view all the answers

standard costs are derived from which source?

General standards for operations Signup and view all the answers

Activity-based costing is described as the most thorough costing method. What aspect makes it less favorable for companies?

<code>Most expensive to implement</code> Signup and view all the answers

Which of the following is true regarding responsibility accounting?

A responsibility accounting system segregates uncontrollable costs from controllable costs. Signup and view all the answers

In the context of Cost Standards in Budgeting, what is the main purpose of standards?

To align actual incurred costs with budgeted costs. Signup and view all the answers

What is an example of an uncontrollable cost that might be excluded from a manager's performance report?

Fixed overhead costs Signup and view all the answers

How do fixed costs differ from variable costs in relation to controllability?

Fixed costs are sometimes uncontrollable; variable costs are sometimes controllable. Signup and view all the answers

Which statement accurately describes the relationship between indirect costs and controllability?

Indirect costs are not always uncontrollable. Signup and view all the answers

What is the primary difference between direct and indirect costs in terms of their impact on budgets?

Direct costs can be directly traced to specific cost objects, while indirect costs cannot. Signup and view all the answers

Standards Setting in Planning, Budgeting and Forecasting

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