Standard costing primarily aims at ___ and ___ in production processes.

Eliminating waste and increasing efficiency

True or False: Historical costs are useful for setting future price quotations.

False. Historical costs are obtained too late and cannot be used for price quotations.

Fill in the blank: Standard costs are based on ___ and ___ for predetermined calculations.

Planned operations and expected capacity utilization

What are the two major categories of costs in standard costing?

Historical Costs and Pre-determined Costs

True or False: Standard costing is a separate method of product costing.

False. Standard costing is a control device and can be used with any method of product costing.

Fill in the blank: The difference between actual costs and standard costs is known as ___.

Variances

What are the objectives of standard costing?

Standard costing has multiple objectives.

• Institutes control mechanisms.

• Measures operational efficiencies.

• Facilitates management by exception.

True or False: Standard costing can be effectively applied in service industries.

False. Standard costing is primarily applicable to manufacturing costs.

Fill in the blank: Basic standards are established for ___ and are seldom revised.

Long-term use

What are the advantages of using standard costing in cost management?

It aids in proper planning, efficient cost control, motivates employees, facilitates inventory control, and helps in budgeting.

Fill in the blank: The process of setting standards relies heavily on the accuracy and ___ of the standards.

Acceptance

What are the three types of current standards?

Ideal standards, Expected standards, and Normal standards

True or False: Standard costs can easily be fixed for industries manufacturing non-standardized products.

False. Standard costing is unsuitable for job manufacturing industries.

Fill in the blank: The standard cost is a predetermined calculation of presumed costs under ___ conditions.

Specified

What are the limitations of standard costing?

It can be costly, difficult to fix standards accurately, unsuitable for service industries, and may discourage workers if set unrealistically high.

Fill in the blank: Current standards are related to ___ and are revised at regular intervals.

Current circumstances

What is the role of a standard committee in establishing standard costs?

The standard committee, comprising various functional heads, determines standards based on historical costs and other relevant factors.

True or False: Standard costing can lead to increased paperwork in accounting.

False. Standard costing is economical and reduces paperwork.

Fill in the blank: The essence of standard costing is to set ___ and targets to achieve them.

Objectives

What distinguishes expected standards from ideal standards?

Expected standards are based on attainable performance with allowances for losses, while ideal standards assume perfect efficiency.

Fill in the blank: Standard costing helps in distinguishing between ___ and ___ activities.

Skilled and unskilled

What factors contribute to the establishment of standard costs?

Factors include historical performance, cost projections, and conditions of production.

True or False: The standard costing system requires detailed records and a large staff.

False. It requires fewer records and a smaller staff.

Fill in the blank: The main purpose of variance analysis in standard costing is to learn about the ___ from the standard.

Amount and reason for variations

What are the two types of costs considered in standard costing?

Direct costs and overhead costs

Fill in the blank: Standard costing provides a framework for ___ and ___ management.

Cost control and efficiency