Ch. 9 HW Solutions

Ch. 9 HW Solutions - CHAPTER 9 STANDARD COSTING: A...

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STANDARD COSTING: A MANAGERIAL CONTROL TOOL QUESTIONS FOR WRITING AND DISCUSSION 1. Standard costs are essentially budgeted amounts on a per-unit basis. Unit standards serve as inputs in building budgets. 2. Unit standards are used to build flexible budgets. Unit standards for variable costs are the variable cost component of a flexible budgeting formula. 6. Ideal standards are perfection standards, representing the best possible outcomes. Currently attainable standards are standards that are challenging but allow some waste. Currently attainable standards are often chosen because many feel they tend to motivate rather than frustrate. 12. A standard cost variance should be investigated if the variance is material and if the benefit of investigating and correcting the deviation is greater than the cost. 21. The volume variance is caused by the actual volume differing from the expected volume used to compute the predetermined standard fixed overhead rate. If the actual volume is different from the expected, then the company has either lost or earned a contribution margin. The volume variance signals this outcome, and if the variance is large, then the loss or gain is large since the volume variance understates the effect. 19
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Ch. 9 HW Solutions - CHAPTER 9 STANDARD COSTING: A...

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