Management Accounting

The primary difference between standards and budgets is that a standard is a unit amount, whereas a budget is a total amount

An advantage of standard costs is that standard costs facilitate management planning by establishing expected future costs.

The direct labor price standard generally includes employer payroll taxes and fringe benefits, such as paid holidays and vacations.

(Actual Hours X Actual Rate) - (Standard Quantity X Actual Price) = Labor Price Variance. 

Standard hours allowed are the hours that should have been worked for the units produced.

Variance reports facilitate the principle of "management by exception"

The income statments prepared under a standard cost accounting system, cost of goods sold is stated at standard cost. 

Wich of the following is an advantage of standard costs?

If the predetermined overhead rate per hour is $6 for variable and 2$ for fixed overhead, standard direct labor hours per unit is 2 hours and actual direct labor hours per unit was 1.5 hours, then the overhead standard cost per unit is

The formula for the labor quantity (or efficiency) variance is 

If actual overhead is $70,000, overhead applied is $67,000 and overhead budgeted for the standard hours allowed is $78,000, then the overhead controllable variance is

In a standard cost accouting system, a company purchased raw materials on account for $46,5000 when the standard cost was $44,000. The journal entry would not include a 

Determining the unit cost of manufacturing a product is an output of financial accounting. 

Raw materials are equal to direct materials minus indirect materials.

In calculating gross profit for a manufacturing company, the cost of goods manufactured is deducted from net sales.

Manufacturing costs incurred in a job order system are accumulated by debits to Purchases, Factory Labor and Manufacturing Overhead.

The entry to record the cost of goods sold includes a debit to Finished Goods Inventory.

A debit balance in the Manufacturing overhead account at the end of the period indicates that overhead has been overapplied. 

Costs are assigned to each specific job in a process cost system.

More materials requisitions are generally required in a process cost system than in a job order cost system.

The overhead controllable variance is the difference between the actual overhead costs incurred and the overhead applied. 

(Actual Quantity X Standard Price) – ( Standard Quantity X Actual Price) = Materials Price Variance.

Ideal standards represent an efficient level of performance that is attainable under expected operating conditions.

Budgeting is not used in not-for-profit organisations because it is not necessary for these organizations to engage in profit planning. 

The manufacturing overhead budget shows only the expected indirect labor costs for the year.

Flexible budgets can be prepared for each of the types of budgets included in the master budget.

With a flexible budget, if production increases, budget allowances for variable costs should increase both directly and proportinately.

Flexible budget reports consist of two sections: production data and cost data.

Under responsibility accounting, the evaluation of manager's performance is based on the matters directly under that manager's control.

One disadvantage of budgeting is that it does not facilitate the coordination of activities within a business.

Budgeting always has the effect on human behaviour of inspiring managers to higher levels of performance.

Budgeting is the process of establishing company-wide objectives that serve as a deterrent to waste and inefficiency.

Only controllable costs are included in a responsibility performance report, and there is no distinction made between variable and fixed costs.

A responsibility reproting system begins with the lowest level of responsibility in an organization and moves upward to each higher level.

The primary basis for evaluating the performance of a manager of an investment center is return on investment.

Absorption cost pricing is more consistent with cost-volume-profit analysis used to measure the profit implications of changes in prices and volume.

An advantage of the cost-based transfer price approach is that it can increase a division manager’s control over the division’s performance.

Under cost-plus pricing, the markup percentage is computed by dividing desired ROI per unit by variable cost per unit.

A static budegt report is appropriate for

The flexible budget report includes all of the following sections except