True/False ____ 1. The most effective means of presenting standard factory overhead cost variance data is...

True/False

____ 1. The most effective means of presenting standard factory overhead cost variance data is through a factory overhead cost variance report.

____ 2. Factory overhead uses different variances than direct materials and direct labor because factory overhead has fixed and variable cost elements. Direct materials and direct labor are variable costs.

____ 3. Standard costs may be incorporated into the accounts in the general ledger.

____ 4. Standards should be revised when prices, product designs, labor rates, or manufacturing methods change.

____ 5. An example of a criticism of standard costs is that standards may limit operating improvements by discouraging improvement beyond the standard.

Solutions

Expert Solution

1. Factory overhead cost variance report provides the necessary details relating to standard factory overhead cost variance data. It represents a comparison between the actual and budgeted overhead.

Answer: True

2. Factory overhead also comprises of certain fixed manufacturing overhead like factory rent, factory supervisor salary, etc. And direct labor and direct materials are variable as they can be allocated to cost units.

Answer: True

3. Yes, in certain industries the standard cost set based on price, technical specification, market conditions, etc. can be incorporated in the general ledger.

Answer: True

4. The standards costs are set on the basis of current conditions. For example, if the company has purchased a more efficient machine which produces more units in less time, then the quantity standard should be revised otherwise the a low standard will be implemented.

Answer: True

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ekkarill92 answered 1 year ago

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