Discussion of Ch 23 Homeworrk

Discussion of Ch 23 Homeworrk - DISCUSSION OF ANSWERS TO...

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DISCUSSION OF ANSWERS TO HOMEWORK PROBLEMS FOR STANDARD COSTING Chapter 23 Q1 Standard costs are based solely on expected future costs and conditions. True. Standard costs are based upon what we expect them to be during the period of manufacture in the future. They are realistic estimates of future operating costs. Standard costs are NOT actual costs. Q2. Although expensive to install and maintain, a standard cost accounting system can save a company considerable amounts of money by reducing resource waste. True. The vast majority of manufacturing companies use standard costing. It is true that a standard costing system is expensive to install and maintain. Standard costing can be used in conjunction with job order or process costing. Q6. A production manager usually is responsible for direct materials used and direct labor hours used. True. Production normally takes place in what we have called the “Work in Process Building.” It is here that labor is consumed as well as overhead to convert materials into finished goods. The individual responsible for this process is the Production Manager. Q7. In a standard costing system, standard costs eventually flow into the Cost of Goods Sold Account Standard Cost Account Sales Account o Answer: Cost of Goods Sold Account. . Standard costs are used exclusively to compute all three cost elements of product cost- direct materials, direct labor and overhead. As such, these are the costs which will eventually flow into cost of goods sold when the product is sold. Q8. A standard costing system: is not typically used by management for cost planning and cost control purposes is a system in which all costs affecting the three inventory accounts and the Cost of Goods Sold account are stated in terms of actual costs incurred. depends on actual costs rather than planned costs
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This note was uploaded on 02/02/2012 for the course ECON 125 taught by Professor Ho during the Summer '10 term at San Diego State.

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Discussion of Ch 23 Homeworrk - DISCUSSION OF ANSWERS TO...

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