test 3 chapter 7 – Flashcards

The standard cost is how much a product should cost to manufacture.

Normally standard costs should be revised when labor rates change to incorporate new union contracts.

Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials spoilage.

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials quantity variance was $2,200 unfavorable.

Since the controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable.

Standards are more widely used for nonmanufacturing expenses than for manufacturing costs.

An example of a nonfinancial measure is the number of customer complaints.

Which of the following would not lend itself to applying direct labor variances?

At the end of the fiscal year, variances from standard costs are usually transferred to the: