In standard costing, the standards are developed only for overhead costs. the st

ID: 2490964 • Letter: I

Question

In standard costing, the standards are developed only for overhead costs. the standards are developed primarily from past costs. comparisons with actual costs usually are not performed. debit and credit entries to inventory accounts are made at standard costs. A summary of expected costs for a range of activity levels that is geared to changes in the level of productive output is the definition of a continuous budget. flexible budget. master budget. period budget. A flexible budget is most useful for budgeting and planning purposes. when actual output equals budgeted output. as a cost control tool to help evaluate performance. when a product's cost structure includes variable costs only. "The difference between actual hours worked and standard hours allowed for the good units produced, multiplied by the standard labor rate" is a description of the direct labor rate variance. direct labor efficiency variance. total direct labor cost variance. direct labor quantity variance.

Explanation / Answer

In standard costing

d. debits and credit entries to inventory accounts are made at standard costs

since standard costing is used for recording the cost and eventually the difference between the actual and standard cost is recorded as variance

2) Flexible budget

b.Flexible budget is prepared for performance evaluation in which the budget is prepared for actual activity at standard cost

3) Flexible budget

c. as a cost control tool to help evaluate performance

therefore we prepare flexible budget for actual activity with standard cost

3) (AH – SH) SR

b.Direct labor Efficiency variance

Since Efficiency variance is caused due to the difference between the actual hours allowed and standard hours allowed