Chapter 8

Question 1

Controllable costs

Answer 1

Controllable

ACTUAL MATERIAL * STANDARD COST

ACTUAL MATERIAL * NEW STANDARD

=

CONTROLLABLE VARIANCE

Question 2

UNCONTROLLABLE COSTS

Answer 2

ACTUAL MATERIAL * NEW STANDARD

ACTUAL COST SPENT

=

UNCONTROLLABLE

Question 3

TOTAL MATERIAL VARIANCE COST

Answer 3

MATERIAL * STANDARD COST

-

ACTUAL MATERIAL COST

= TOTAL MATERIAL VARIANCE

Question 4

When calculating new standard are on index number

Answer 4

The index increase is applied to the cost not just multiples alone to the material
So it’s material * (standard cost + index increase )

Question 5

When calculating new standard are on seasonal variation

Answer 5

STANDARD IS THE ORIGINAL SET ONE IN TEXT

SEASONAL VARIATION IS APPLIED TO MONTH IN TEXT JUST TAKE OR ADD THE DIFFERENCE ONTO THE STANDARD PRICE