A price variance measures: Group of answer choices How good a company is in keeping its unit costs of material and labor within standards. The difference between current and previous production costs. How well a company uses its materials and labor to produce a unit of output. The difference between its production costs and its competitors’ production costs.

A price variance measures: Group of answer choices How good a company is in keeping its unit costs of material and labor within standards. The difference between current and previous production costs. How well a company uses its materials and labor to produce a unit of output. The difference between its production costs and its competitors’ production 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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The analysis of variance is an essential management accounting approach used to determine the cost of a product and its profitability. Managers use variance analysis to make judgments regarding the expenses of labour and materials that are incurred as a result of the production of a product or the provision of a service. In relation to the above, critically appraise five (5) differences between fixed and variable costs along with examples of each cost. Critically evaluate the purposes and features of marginal costing?
7. Which of the following is the best definition of a variable cost? A. A variable cost is one which is directly traceable to an activity of the business for which the cost will be used. B. A variable cost is one which is associated with goods or services purchased, or produced, for sale to customers. C. A variable cost is one which changes with changes in the level of activity, over a defined period of time. D. A variable cost is one which is spread over a number of activities of the business for which costs are to be determined.
Which cost accounting method assumes that the cost of production is driven by the number of units produced? A. Activity-Based Costing (ABC)B. Standard CostingC. Absorption CostingD. Variable Costing
Which of the following statements is CORRECT with respect to fixed costs per unit? Select one: A.They will decrease as production decreases. B.They will increase as production increases. C.They will increase as production decreases. D.They will remain the same as production levels change.
Which of the following is the indicator of the rate at which company is earning profit? Select one: a. Margin of safety b. All options are correct c. Contribution margin d. Profit volume ratio
Sales variance is the difference between sales price and ---------- Labour rate variance Sales volume variance Expenditure variance Usage variance Price variance
Gross profit variance analysis can be used to study the effect of: " Changes in cost of goods sold on a company's profitability. O Changes in product sales mix on a company's profitability. Changes in selling prices on a company's profitability. O All of the choices. O Changes in volume of goods sold on a company's profitability.
1. What are the three primary reasons of using a standard cost system? In a business that routinely manufactures the same products or performs the same services, why are standards helpful? 2. What are ideal standards? What are currently attainable standards? Explain which standard is usually adopted and why. 3. Some people suggest that the direct labor rate variance is never controllable. Do you agree or disagree? Give reasons to support your answer.
How can the sales-quantity variance be decomposed further?
A company using direct costing in its performance evaluation would normally include the following variance in its report, except Price variance Volume variance Efficiency variance Budget variance
Cost-volume-profit analysis is used to make many decisions, including product pricing and controlling costs. What assumptions are used in cost-volume-profit analysis?
How would you define fixed and variable product costs? How are these costs used in determining the contribution margin of different products manufactured and sold? What relationship do you see between these cost behaviors as they relate to the volume of sales/production and profitability?