MBA Accounting Final Exam
questions and answers
Standard Cost is✔✔is a budget for the production of one unit of product or service
perfect or ideal standard is✔✔one that can be attained only under nearly perfect
operating conditions
practical standards are✔✔expected to be attained under normal conditions
cost variance is✔✔the difference between the actual cost with the budgeted or
standard cost
Direct materials price variance is✔✔actual quantity(actual price - standard price)
Direct materials quantity variance is✔✔standard price (actual quantity - standard
quantity)
Direct labor rate variance is✔✔actual hours (actual rate - standard rate)
Direct labor efficiency variance is✔✔standard rate (actual hours - standard hours)
Flexible budgets are✔✔not based on only one level of activity and is a detailed plan
for controlling overhead costs that is valid in the firms relevant range of activity
static budget is✔✔based on a particular planned level of activity
what are the three characteristics of information✔✔must be relevant accurate and
timely
relevant costs affect✔✔the future and differ between alternatives
sunk costs are✔✔costs that have already been incurred
Differential costs are✔✔the difference in a cost item under two decision alternatives
opportunity costs are✔✔the potential benefits given up when the choice of one
action precludes a different action
the four major influences in pricing decisions are✔✔customer demand
actions of competitors
costs
political, legal and image based related issues
demand or average revenue curve✔✔shows the relationship between sales price
and quantity of units demanded
questions and answers
Standard Cost is✔✔is a budget for the production of one unit of product or service
perfect or ideal standard is✔✔one that can be attained only under nearly perfect
operating conditions
practical standards are✔✔expected to be attained under normal conditions
cost variance is✔✔the difference between the actual cost with the budgeted or
standard cost
Direct materials price variance is✔✔actual quantity(actual price - standard price)
Direct materials quantity variance is✔✔standard price (actual quantity - standard
quantity)
Direct labor rate variance is✔✔actual hours (actual rate - standard rate)
Direct labor efficiency variance is✔✔standard rate (actual hours - standard hours)
Flexible budgets are✔✔not based on only one level of activity and is a detailed plan
for controlling overhead costs that is valid in the firms relevant range of activity
static budget is✔✔based on a particular planned level of activity
what are the three characteristics of information✔✔must be relevant accurate and
timely
relevant costs affect✔✔the future and differ between alternatives
sunk costs are✔✔costs that have already been incurred
Differential costs are✔✔the difference in a cost item under two decision alternatives
opportunity costs are✔✔the potential benefits given up when the choice of one
action precludes a different action
the four major influences in pricing decisions are✔✔customer demand
actions of competitors
costs
political, legal and image based related issues
demand or average revenue curve✔✔shows the relationship between sales price
and quantity of units demanded
