Question 1
1 markWhich of the following is a potential disadvantage of using a standard costing system?
Cambridge International A Level · Accounting (9706)
Standard costing: Practice Questions
5 multiple-choice questions marked as you go, and 5 written questions with worked solutions. All on Standard costing.
10 questions19 marksFree, no account
Question 2
1 markWhich variance is calculated by comparing the actual quantity of units sold with the budgeted quantity of units sold, valued at the standard contribution (or profit) per unit?
Question 3
1 markWhat does a favourable sales price variance indicate?
Question 4
1 markWhich variance is calculated by comparing the actual quantity of materials used at the standard price with the standard quantity allowed for actual production at the standard price?
Question 5
1 markA manufacturing company operates a standard costing system. The following information is provided for the month of May:
- Standard labour time per unit: \( 3 \) hours
- Actual production: \( 2,000 \) units
- Actual labour hours worked: \( 5,800 \) hours
- Budgeted fixed overhead absorption rate: \( \$4 \) per direct labour hour
What is the fixed overhead efficiency variance?
Question 6
2 marksDefine what is meant by a standard costing system within a manufacturing organization.
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Question 7
4 marksExplain the difference between a fixed overhead capacity variance and a fixed overhead efficiency variance.
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Question 8
3 marksBriefly explain how an adverse direct material price variance might be interrelated with a favourable direct material usage variance.
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Question 9
2 marksState two disadvantages or limitations of implementing a standard costing system in a business that operates in a rapidly changing environment with frequent price fluctuations.
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Question 10
3 marksIdentify three possible causes for an adverse direct labour efficiency variance in a factory environment.
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