Consider the following questions:
1. Discuss the difference between budgets and standard costs.
2. What is the quantity decision? The pricing decision?
3. Why is historical experience often a poor basis for establishing standards?
4. What arc ideal standards? Currently attainable standards? Of the two, which is usually adopted? Why?
5. How does standard costing improve the control function?
6. The budget variance for variable production costs is broken down into quantity and price variances. Explain why the quantity variance is more useful for control purposes than the price variance.
7. Explain why the direct materials price variance is often computed at the point of purchase rather than at the point of issuance.
8. The direct materials usage variance is always the responsibility of the production supervisor. Do you agree or disagree? Why?
9. The direct labor rate variance is never controllable. Do you agree or disagree? Why?
10. Suggest some possible causes of an unfavorable direct labor efficiency variance.
11. Explain why the variable overhead spending variance is not a pure price variance.
12. What is the cause of an unfavorable volume variance? Does the volume variance convey any meaningful information to managers?
13. What are control limits, and how are they set?
14. Explain how the two-. three-, and four-variance overhead analyses are related.
15. Explain what mix and yield variances arc.