Question

1. What are the three primary reasons of using a standard cost system? In a business that routinely manufactures the same products or performs the same services, why are standards helpful?

2. What are ideal standards? What are currently attainable standards? Explain which standard is usually adopted and why.

3. Some people suggest that the direct labor rate variance is never controllable. Do you agree or disagree? Give reasons to support your answer.

Answer 1

1. What are the three primary reasons of using a standard cost system? In a business that routinely manufactures the same products or performs the same services, why are standards helpful?

1) what are the three pimary reasons of using a standard Cost system? In a business that soutinely manufactures are the same poducts or pes from the same services, why are standards helpful? Aus standard cost system is very importante for almost every entity there are many reasons of using it, some of them are, * It helps in the cist saving in becord keeping if the entity. * It helps to a great extent to reduce the production cost. * Helps in managerial planning and decision making with creating an standard. 2). What are ideal standards? what are currently attainable standards? Explain which standards usually adopted and why.. Ans: Ideal standards is those standard that are achieved with full efficiency in the best possible way and this term is basically used in standard Costing - Cussently attainable standard means the achievable standard that can be achieve but certain conditions

applied to it which affects the controllable standards. standard Casting should be adopted because by using it the variance that is basically the dibberence between standard and ideal production and con further be useful as measure check as targeted of some other divisions can v taken. 3) Some people suggest that the direct labour sate variance is never contoollable. Do you agreeds disagree? Give seasons to support your answer. Ans. It is absolutely Cossect that direct labour sate vastance is never contoollable in nature boy as wages paid to. laboud is fired and skilled labour changes more wages and the overtime charges is also given if labour works for extra hour, so these type of costs are on avoidable in nature. Labour sate variance = Cactural hours worked * actual sate) - Cactual has coxked * standard sate).