COST ACCOUNTING
STANDARD COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Prices in the market decreased
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Prices in the market are increasing
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Standard manufacturing costs > actual costs
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Actual production costs > standard production costs
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Detailed explanation-1: -COGM is the total cost to make products for sale. The cost of goods sold (COGS) is the actual expenses related to producing those products. COGM does not include marketing or distribution costs, it only includes direct labor, materials, and factory overhead costs associated with producing finished goods inventory.
Detailed explanation-2: -1. Standard costs are the estimated costs of labour, material, and other costs of production. Actual Costs, on the other hand, are those realized during the period and compared at the end of the period. This difference between the standard cost vs actual cost is termed as Variance.
Detailed explanation-3: -The difference between the standard cost and actual cost is known as a variance. The presence of a variance indicates a deviation from what was recorded in the profit plan. If actual costs are greater than standard costs, management can likely anticipate a lower profit than expected.