Which of the following best defines the term "Analysis of Variance" in the context of standard costing?

The process of calculating actual costs and comparing them to standard costs.

The process of isolating the causes of variances between actual and standard costs.

The calculation of favourable and unfavourable variances.

The comparison of budgeted overhead with actual overhead costs.

What is the primary purpose of calculating variances in standard costing?

To determine the budget for the next fiscal year.

To assess the efficiency of cost centers.

To identify uncontrollable variances.

To compare actual and standard costs.

What is an "uncontrollable variance" in the context of standard costing?

A variance that is favorable but cannot be attributed to any specific cause.

A variance that is unfavorable but can be corrected by management.

A variance that arises due to unforeseen factors beyond the control of a person or department.

A variance that can be traced back to a specific cost center.

What does "Budgeted Figure" refer to in the context of variance analysis?

The actual cost incurred during a period.

The standard cost based on normal production.

The actual variable overhead cost.

What is the formula for calculating the Variable Overhead Efficiency Variance (VOEV)?

(Std. Time x Std. Rate) - (Actual Time x Actual Rate)

Actual Time (Std. Rate - Actual Rate)

(Std. Variable for actual output - Actual hours) x Std. Variable overhead rate

(Std. Variable Overhead Rate x Actual Hours) - Actual overhead cost

What is the purpose of analyzing overhead variances in standard costing?

To determine the actual fixed overhead cost.

To calculate the budgeted fixed overhead.

To assess the efficiency of labor.

To understand the reasons behind cost deviations in overhead expenses.

Which type of variance arises due to idle time of workers caused by factors like strikes or machinery breakdown?

Labour Time (Efficiency) Variance (LTV/LEV)

What is the formula for calculating Fixed Overhead Volume Variance (FOVV)?

(Std. Time for Actual Output - Budgeted Time) x Std. Rate

(Actual Time Worked - Budgeted Time) x Std. Rate

(Actual No. of Working Days - Std. No. of Working Days) x Std. Rate per Day

(Revised Budgeted Time - Budgeted Time) x Std. Rate per Time

What is the purpose of analyzing Material Mix Variance (MMV) in standard costing?

To assess the efficiency of labor.

To calculate the budgeted material cost.

To understand the reasons behind variations in material usage.

To determine the actual material cost.

Standard Costing - 2 Free MCQ Practice Test with Solutions

	Cost Management 48 videos\|51 docs\|17 tests

	Cost Management 48 videos\|51 docs\|17 tests

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