True or false: reading a variance

Exercise and reference answers

Questions

1. Statement is true

   Yes

   Statement

   Material cost variance is standard cost less actual cost.

2. Statement is true

   Yes

   Statement

   Material price variance is usually the purchase department's responsibility.

3. Statement is true

   Yes

   Statement

   Material cost variance equals usage variance plus price variance.

4. Statement is true

   No

   Statement

   A favourable variance means actual cost exceeded standard cost.

5. Statement is true

   No

   Statement

   Standard cost is recorded after the work is finished.

Instructions

Decide whether each statement about standard costing is true.

Explanation