Chapter 8 6. The purchasing agent is responsible for developing the direct mater

Question

Chapter 8

6. The purchasing agent is responsible for developing the direct materials quantity standard.

a. True

b. False

7. The standard overhead cost is the sum of the estimates of variable and fixed overhead costs in the next accounting period.

  a. True

b. False

8. The standard fixed overhead rate is usually based on the expected number of standard labor hours.

  a. True

b. False

9. Variance analysis involves computing the difference between standard and actual costs.

  a. True

b. False

10. Corrective action is necessary even if a variance is insignificant.

a. True

b. False

Explanation / Answer

6) True

The purchasing department is responsible in the organization

7) True

Standard overhead rates are used during the budgeting process to prepare the future production and output plans for the company. It is for next accounting period

8) True

To determine a predetermine standard rate we assign fixed overhead on the basis of labour hours. This is done in absorption costing

9) True

tVariance Analysis to identify and explain the reasons for the difference between a budgeted amount and an actual amount.Variance analysis is usually associated with a manufacturer's product costs.

10) False

If it is insignficant that means our budgeted and actual amount/cost are almost same so no corrective action is required

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