Match the terms a through e with their correct definition 1 through 5.
a. Standard cost card 1. Quantity of input required under normal
b. Management by exception 2. Quantity of input required if a production process
is 100% efficient.
c. Standard cost 3. Managing by focusing on large differences from
d. Ideal standard 4. Record that accumulates standard cost
e. Practical standard 5. Preset cost for delivering a product or service
under normal conditions.
|a. Standard cost card||4.|
|b. Management by exception||3.|
|c. Standard cost||5.|
|d. Ideal standard||2.|
|e. Practical standard||1.|
Managerial accounting is that branch in which internal information of a business entity is accumulated and communicated with the managers to conduct various analyses and perform decision-making.
A standard cost card refers to a report prepared by the management to record the information associated with standard cost. The managers further use such a report to compare the actual results and for the determination of variances.
Management by exception refers to reviewing the operating and financing results of a business concern and comparing them with the desired outcomes. When discrepancies are found in the outcomes, such issues are further forwarded to the managers for their attention and initiation of cost control.
In the cost accounting branch, standard cost refers to the cost expected to be incurred by an entity to produce a specific product or service. Standard costs are further compared with the actual costs for applying cost control measures.
Ideal standards represent the standard cost for presenting perfection in the performance of a department/division. In this process, it is assumed by the management that there is no idle time and the work is conducted with 100% efficiency.
In the accounting process, practical standards refer to the levels set by the management associated with a particular task when the working conditions and related environment is normal.
Metal sphere A is charged negatively and then brought near an uncharged metal sphere B (Figure 14.78). Both spheres rest on insulating supports, and the humidity is very low.
(a) Use +’s and −’s to show the approximate distribution of charges on the two spheres. (Hint: Think hard about both spheres, not just B.)
Refer to Exercise 21-13. Hart Company records standard costs in its accounts and its materials variances in separate accounts when it assigns materials costs to the Work in Process Inventory account.
1. Show the journal entry that both charges the direct materials costs to the Work in Process Inventory account and records the materials variances in their proper accounts.
2. Assume that Hart’s materials variances are the only variances accumulated in the accounting period and that they are immaterial. Prepare the adjusting journal entry to close the variance accounts at period-end.
3. Identify the variance that should be investigated according to the management by exception concept. Explain.
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