- Home
- Accounting and Auditing
- Cost and Management Accounting
- Standard costing
Question
Download Solution PDFSequence the following activities in the process of standard costing.
A. Establishing standard costs
B. Measurement of actual costs
C. Identifying variances and causes of variance
D. Disposing the variances to cost and profit centers
E. Comparision of actual and standard costs
Choose the correct answer from the options given below:
This question was previously asked in
UGC Paper 2: Commerce_17th Oct 2020 Shift 2
Attempt Online
View all UGC NET Papers >
- A, B, E, C and D
- A, B, C, Dand E
- A, B, E, Dand C
- A, B, D, Cand E
Answer (Detailed Solution Below)
Option 1 : A, B, E, C and D
Free Tests
View all Free tests >
Free
UGC NET Paper 1: Mock Test
13.5 K Users
50 Questions 100 Marks 60 Mins
Start Now
Detailed Solution
Download Solution PDFStandard costing is the practiceof substituting an expected cost for an actual cost in the accounting records.
Standard costs are assigned to production units rather than actual costs; after total costs are accumulated using standard cost, these total are compared to actual accumulated costs, and the difference is charged to avarianceaccount.
![[Solved] Sequence the following activities in the process of standard (2)](https://i0.wp.com/cdn.testbook.com/images/production/quesImages/quesImage56.png "[Solved] Sequence the following activities in the process of standard (2)")
Process of Standard Costing:
![[Solved] Sequence the following activities in the process of standard (3)](https://i0.wp.com/businessjargons.com/wp-content/uploads/2018/03/process-of-standard-costing.jpg "[Solved] Sequence the following activities in the process of standard (3)")
1) Establishing standard costs:
- The first step is to set the standards on the basis of management's expectations and the production engineer would anticipate the costs.
- While establishing the standard cost, more weightage is given to past records, the current plan of production, and future trends.
- Finally, the standard will be fixed in both quantity and costs.
2) Measurement/Determination of actual costs:
- After standards are set, the actual costs are determined for each element i.e. material, labor, and overheads.
- The actual costs can be measured using the invoices, accounts book, wage sheets, etc.
3) Comparison of actual and standard costs:
- The next step is to compare the actual costs that occurred with the standard costs determined earlier.
- The difference between them is known as a variance.
4) Identifying variances and causes of variance:
- If the varianceis positive it is known as favorable variance, and if the variance is negative it is known as an unfavorable/adverse variance.
- After the comparison is complete, the next step is to find out the causes for favorable or adverse variance.
- Corrective measures must be taken to evaluate the overall performance.
5)Disposing the variances to cost and profit centers:
- The last step in the process is to dispose of the variance by transferringit to the costing profit and loss account.
- Another method is to carry forward the variances to the next financial year by crediting the same to a reserve account to be set off in a subsequent year.
- The favorable or adverse variance may cancel each other in the course of time and thus be disposed of.
Standard costing can be helpful in ascertaining the profitability of the business at any level of production.
Therefore, Option 1) is correct in the process of standard costing.
Latest UGC NET Updates
Last updated on Jun 1, 2024
-> The UGC NET Exam Dates for the re-examination of the June 2024 cyclewill be announced soon.
-> Earlier, the UGC NET Examheld on 18th June 2024 was cancelled by the authorities.
-> The UGC-NET exam takes place in CBT mode for more than 80 subjects, to determine the eligibility for'Junior Research Fellowship’ and ‘Assistant Professor’ posts.
-> The exam comprises two papers - Paper I and Paper II. Paper I consistsof 50 questions and Paper II consists of100 questions.
-> The candidates who are preparing for the exam can check the UGC NET Previous Year PapersandUGC NET Test Seriesto boost their preparations.
India’s #1 Learning Platform
Start Complete Exam Preparation
![[Solved] Sequence the following activities in the process of standard (4)](https://i0.wp.com/cdn.testbook.com/qb_resources/daily-live-master-classes.svg "[Solved] Sequence the following activities in the process of standard (4)")
Daily Live MasterClasses
![[Solved] Sequence the following activities in the process of standard (5)](https://i0.wp.com/cdn.testbook.com/qb_resources/practice-question-bank.svg "[Solved] Sequence the following activities in the process of standard (5)")
Practice Question Bank
![[Solved] Sequence the following activities in the process of standard (6)](https://i0.wp.com/cdn.testbook.com/qb_resources/mock-tests-quizzes.svg "[Solved] Sequence the following activities in the process of standard (6)")
Mock Tests & Quizzes
Get Started for Free
Download_on_the_App_Store_Badge_US-UK_RGB_blk_4SVG_092917Trusted by 5.8 Crore+ Students
More Standard costing Questions
Q1.As per the information given below, what is the correct material yield variance ?Standard input = 100 kgStandard yield = 90 kgStandard cost per kg of output = Rs. 20Actual input = 200 kgActual yield = 182 kgActual cost per kg of output = Rs. 19
Q2.An unfavourable overhead volume variance indicates that:
Q3.Computation of overhead absorption rates should be based on:
Q4.Which of the following may be the reasons for a material usage variance?(A) Negligence in the use of materials(B) Changes in basic prices of materials(C) Poor or improper machine handling(D) Wastage due to inefficient production methods(E) Change in product design requiring usuage different from the standardChoose the correct answer from the options given below:
Q5.Which of the following are the underlying assumptions of cost-volume profit (CVP) analysis?(A)Number of units produced and sold are equal(B)Cost inputs and the output produced are linearly related(C)Sales price and sales mix remain constant(D)Zero base budgeting underly costs and pricing decisions(E) Total fixed costs and variable cost per unit are constantChoose the correct answer from the options given below:
Q6.Answer the correct material usage variance from the information given below:Standard material cost for manufacturing 1000 units of an output is 400 kgs of material at Rs. 2.50 per kg. When 2000 units are produced, it is found that actual consumption was of 825 kgs material at a price of Rs. 2.70 per kg.:
Q7.What is the overhead volume variance?
Q8.Obtain the overhead spending variance.
Q9.What is the labour efficiency variance?
Q10.What is the material quantity variance?
More Cost and Management Accounting Questions
Q1.Given below are two statementsStatement I: The stage in the manufacturing process where joint products are separately identifiable is called split-off point.Statement II: The production costs incurred after the split-off point are called separable costs.In light of the above statements, choose the correct answer from the options given below
Q2.An economic enterprise requires 90,000 units of certain item annually. The cost per unit is Rs. 3. The cost per purchase order is Rs. 300 and the inventory carrying cost is Rs. 6 per unit per year. What is EOQ?
Q3.As per the information given below, what is the correct material yield variance ?Standard input = 100 kgStandard yield = 90 kgStandard cost per kg of output = Rs. 20Actual input = 200 kgActual yield = 182 kgActual cost per kg of output = Rs. 19
Q4.At the break-even point, contribution is equal to
Q5.An unfavourable overhead volume variance indicates that:
Q6.Which of the following are NOT assumptions of Marginal Costing?A. The total cost can be segregated into fixed and variable components.B. Fixed costs per unit of production remains constant.C. Variable cost remains constant per unit of output.D. The selling price per unit remains unchanged.E. Variable cost is variable per unit.Choose the correct answer from the options given below:
Q7.A firm can delay and favourably affect the control of its cash disbursem*nts through the use of:
Q8.Computation of overhead absorption rates should be based on:
Q9.Match List I with List II:List- IEarnings — Valuation ratiosList – IIUnderlying Description(s)A.Price - Earnings (P-E) ratio(I)Stock price divided by accounting net worthB.Earnigs Yield Ratio(II)Firm's P/E ratio divided by an index P/E ratioC.Price - Book (P/B) ratio(III)Stock price divided by the earnings per shareD.Relative P/E ratio(IV)Earning per share divided by stock priceChoose the correct answer from the options given below -
Q10.Which of the following may be the reasons for a material usage variance?(A) Negligence in the use of materials(B) Changes in basic prices of materials(C) Poor or improper machine handling(D) Wastage due to inefficient production methods(E) Change in product design requiring usuage different from the standardChoose the correct answer from the options given below:
Suggested Test Series
View All >
1505 Total Tests with ![[Solved] Sequence the following activities in the process of standard (8)](https://i0.wp.com/cdn.testbook.com/qb_resources/pass-icon.svg "[Solved] Sequence the following activities in the process of standard (8)"){kind=icon}
19 Free Tests
Start Free Test
388 Total Tests with 2 Free Tests
Start Free Test
Suggested Exams
UGC NET Important Links
More Accounting and Auditing Questions
Q1.AS–10 (new) has come into effect from
Q2.Revenue from sale of goods ordinarily is reported as a part of the earning in the period
Q3.“Advance received from a supplier is not taken as income or sales.” This comment is based on
Q4.The policy ‘anticipate no profit and provide for all possible losses’ arises due to
Q5.____ forms the basis for the third.
Q6.When an economy is operating inside the production possibility curve, it indicates that:
Q7.The Guidotti-Greenspan-IMF rule entails:
Q8.As per the CAG (DPC's) Act, 1971, the Comptroller and Auditor General of India:(i)audits all receipts into and expenditures from the Consolidated Fund of India and of each State and of each Union Territory, having a Legislative Assembly(ii)audits all transactions of the Union and of the States relating to Contingency Funds, and Public Accounts(iii) audits receipts and expenditures of bodies or authorities substantially financed from Union or State revenue(iv) audits accounts of bodies or authorities by request
Q9.Which of the following statements is INCORRECT?
Q10.Which of the following statements is INCORRECT in the context of budget and fiscal deficit?
![[Solved] Sequence the following activities in the process of standard (2024)](data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAQAAAC1HAwCAAAAC0lEQVR42mP8/h8AAvMB+NzmkbcAAAAASUVORK5CYII=)