A favorable cost variance occurs when a. actual costs are the same as standard costs b. actual costs are more than standard costs c. standard costs are less than actual costs d. standard costs are more than actual cost
A favorable cost variance occurs when a. actual costs are the same as standard costs b. actual costs are more than standard costs c. standard costs are less than actual costs d. standard costs are more than actual cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Question
A favorable cost variance occurs when
a. actual costs are the same as standard costs
b. actual costs are more than standard costs
c. standard costs are less than actual costs
d. standard costs are more than actual costs
Contribution margin is
a. another term for volume in the "cost-volume-profit" analysis
b. the same as sales revenue
c. the excess of sales revenue over variable cost
d. profit
Which of the graphs in Figure 5-1 illustrates the nature of a mixed cost?
a. Graph 2
b. Graph 4
c. Graph 1
d. Graph 3
Transcribed Image Text:Graph 1
Graph 2
$4
Total units produced
Total units produced
Graph 3
Graph 4
$4
Total units produced
Total units produced
Figure 5-1
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