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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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
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.
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?
What is the difference in variable costing and absorption costing on the income statement? Which method is useful for manager's in making pricing and costing decisions?
Which statement is true? A. Gross profit (GP) variance analysis, is an essential part of financial statements analysis that is used to evaluate the performance of a firm's departments responsible for the firm's line activities (functions). B. Increases and decreases in sales and cost of sales have direct relationship with increases and decreases in GP. C. If there is a negative sales price variance and there is no cost variance, the gross profit variance will be equal to the sales price variance. D. A zero cost variance indicates that there is no difference between the standard cost prices and actual cost prices. E. none of the above
What is the difference between variable costing and absorption costing income statements? a. Provide a hypothetical income statement in both formats in which the number of units sold is different from the number of units manufactured. b. Explain the contrast between the two formats.
Which of the following statements is FALSE? a. There is a cause-and-effect relationship between the cost driver and the amount of cost. b. Over the long run all costs have cost drivers. c. Volume of production is a cost driver of direct manufacturing costs. d. Fixed costs have cost drivers over the short run.
A cost that would be included in product costs under both absorption costing and variable costing is: supervisory salaries. variable selling expenses. factory rent. variable manufacturing costs.
Which type of cost has an unchanging total expense and a decreasing average expense as output increases?
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.