Answered: 4. A difference between standard costs…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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4. A difference between standard costs for cost control and budgeted costs of the same manufacturing effort

a)Cannot exist because the amounts should be the same.

b)Can exist because standard cost represent what cost should be, whereas budgeted cost are expected actual costs

c)Can exist because budgeted costs include some slack, whereas standard cost do not.

d)Can exist because budgeted cost are historical costs, whereas standard cost are based on engineering studies

5. Which of the following statements concerning ideal standards is incorrect?

a)Ideal standards may be better than practical standards when managers seek continual improvement

b)Ideal standards do not make allowances for waste, spoilage, and machine breakdowns

c)Ideal standards generally do not provide the best motivation for workers.

d)Ideal standards are better suited for cash budgeting than practical standards

6. A difference between standard costs used for cost control and budgeted costs

a)Can exist because standard costs represent what costs should have been while budgeted cost represent expected actual costs.

b)Can exist because established budgeted costs involve employee participation and standard cost do not

c)Can exist because standard cost must be determined after the budget is prepared.

d)Can exist because budgeted costs should be verified first by actual activities while standard cost are based on project costs.

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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