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This document discusses key concepts related to standard costing and overhead variances. It defines unfavorable cost variances that are affected by a production process's position on a learning curve. It also discusses how managers determine standard materials and hours, the basis for fixed overhead rates, and the two types of overhead variances. The primary purposes of standard costing are to make production management easier and provide cost control measures. The document identifies the variances that are least and most useful for controlling costs and evaluating plant utilization. It defines how the overhead controllable variance is calculated. Finally, it notes there are two levels at which standards may be set.
This document discusses key concepts related to standard costing and overhead variances. It defines unfavorable cost variances that are affected by a production process's position on a learning curve. It also discusses how managers determine standard materials and hours, the basis for fixed overhead rates, and the two types of overhead variances. The primary purposes of standard costing are to make production management easier and provide cost control measures. The document identifies the variances that are least and most useful for controlling costs and evaluating plant utilization. It defines how the overhead controllable variance is calculated. Finally, it notes there are two levels at which standards may be set.
This document discusses key concepts related to standard costing and overhead variances. It defines unfavorable cost variances that are affected by a production process's position on a learning curve. It also discusses how managers determine standard materials and hours, the basis for fixed overhead rates, and the two types of overhead variances. The primary purposes of standard costing are to make production management easier and provide cost control measures. The document identifies the variances that are least and most useful for controlling costs and evaluating plant utilization. It defines how the overhead controllable variance is calculated. Finally, it notes there are two levels at which standards may be set.
1. _________ It is an unfavorable cost variances that is 1.
_________ It is an unfavorable cost variances that is
directly affected by the relative position of a production directly affected by the relative position of a production process on a learning curve. process on a learning curve. 2. _________ A manager who determines the standard 2. _________ A manager who determines the standard materials per unit and the standard number of hours to materials per unit and the standard number of hours to make a unit of output. make a unit of output. 3. _________ Basis in determining the fixed overhead 3. _________ Basis in determining the fixed overhead rate. rate. 4. A company uses a two way analysis for overhead 4. A company uses a two way analysis for overhead variances: budget (controllable) and volume variance. variances: budget (controllable) and volume variance. The volume variance is based on the The volume variance is based on the a. Total overhead application rate e. Total overhead application rate b. Volume of total expenses at various activity levels f. Volume of total expenses at various activity levels c. Variable overhead application rate g. Variable overhead application rate d. Fixed overhead application rate h. Fixed overhead application rate 5. The primary purpose of using a standard cost systems 5. The primary purpose of using a standard cost systems to: to: a. Make things easier for managers in the production e. Make things easier for managers in the production facility. facility. b. Provide a distinct measure of cost control. f. Provide a distinct measure of cost control. c. Minimize the cost per unit of production g. Minimize the cost per unit of production d. Assure continuous production of goods. h. Assure continuous production of goods. 6. The variance LEAST significant for purposes of 6. The variance LEAST significant for purposes of controlling cost is the: controlling cost is the: a. Material usage variance e. Material usage variance b. Variable overhead efficiency variance f. Variable overhead efficiency variance c. Fixed overhead spending variance g. Fixed overhead spending variance d. Fixed overhead volume variance h. Fixed overhead volume variance 7. The variance MOST useful in evaluating plant utilization 7. The variance MOST useful in evaluating plant utilization is the: is the: a. Variable overhead spending variance e. Variable overhead spending variance b. Fixed overhead spending variance f. Fixed overhead spending variance c. Variable overhead efficiency variance g. Variable overhead efficiency variance d. Fixed overhead volume variance h. Fixed overhead volume variance 8. The overhead controllable variance is calculated as the 8. The overhead controllable variance is calculated as the difference between actual overhead cost incurred and difference between actual overhead cost incurred and the budgeted the budgeted a. Overhead cost for the standard hours allowed e. Overhead cost for the standard hours allowed b. overhead cost applied to the product f. overhead cost applied to the product c. overhead costs at the normal level of activity g. overhead costs at the normal level of activity d. fixed overhead costs h. fixed overhead costs
9- 10. Two levels that standard may be set at: 9- 10. Two levels that standard may be set at: