Indicate whether each statement is true or false. a) DM quantity variance is favorable when the actual price is lower than the standard price/pound. (……….)
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Indicate whether each statement is true or false.
a) DM quantity variance is favorable when the actual price is lower than the standard
price/pound. (……….)
b) DL rate variance is unfavorable when the actual rate per hour was greater than the
standard rate per hour. (……….)
c) The standard direct material quantity is the total amount of material the company
actually used to produce one unit of finished product. (……….)
d) The decision making process includes seven steps. (……….)
e) Perfection standards assume that production takes place in the ideal world. (……….)
f) Information is relevant to a decision problem when it has a bearing on the future and
it differs among competing alternatives. (……….)
g) Irrelevant future costs and benefits are not ignored when analyzing alternative
decisions. (……….)
no need of explanation
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