COST ACCOUNTING
STANDARD COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When calculating cost variances under a standard costing system we must:
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Compare standard costs with actual costs at the standard level of activity
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Compare actual costs with those that were budgeted
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Compare actual costs with standard costs at the actual level of output
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Compare actual outputs against budgeted outputs
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Explanation:
Detailed explanation-1: -When we are calculating variances we must flex the standard costs to reflect the actual level of output that was achieved in the period.
Detailed explanation-2: -A standard cost variance is the difference between a standard cost and an actual cost. This variance is used to monitor the costs incurred by a business, with management taking action when a material negative variance is incurred. The standard from which the variance is calculated may be derived in several ways.
Detailed explanation-3: -Variance is the difference between the actual and standard costs. If the actual cost is higher than the standard cost, the variance is unfavorable.
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