Is a standard cost an estimated cost? What is the primary objective of employing standard costs in a cost system?

Chapter 24
Is a standard cost an estimated cost? What is the primary objective of employing standard costs in a cost system?
What is a budget?
What is the difference between ideal and practical standards? Which standard generally is used in planning?
What is meant by the term management by exception?
What are some advantages of using standard costs? What are some disadvantages?
When might a given company have a substantial favorable materials price variance and a substantial unfavorable materials usage variance?
What is the usual cause of a favorable or unfavorable labor rate variance? What other labor variance is isolated in a standard cost system? Of the two variances, which is more likely to be under the control of management? Explain.
Theoretically, how would an accountant dispose of variances from standard? How does an accountant typically dispose of variances?
Why variances are typically isolated as soon as possible?
Is it correct to consider favorable variances as always being desirable? Explain.
Exercise B
Whitewater’s purchasing agent took advantage of a special offer from one of its suppliers to purchase 44,000 pounds of material at USD 4.10 per pound. Assume 5,500 units were produced and 34,100 pounds of material were used. Compute the variances for materials. Comment on the purchasing agent’s decision to take the special offer.
Exercise D
Blackman Company manufactures a product that has a standard direct labor cost of four hours per unit at USD 24 per hour. In producing 6,000 units, the foreman used a different crew than usual, which resulted in a total labor cost of USD 26 per hour for 22,000 hours. Compute the labor variances and comment on the foreman’s decision to use a different crew

Chapter 25
What is the fundamental principle of responsibility accounting?
List five important factors that should be considered in designing reports for a responsibility accounting system.
How soon should accounting reports be prepared after the end of the performance measurement period? Explain
Name and describe three types of responsibility centers.
Describe a segment of a business enterprise that is best treated as an expense center. List four indirect expenses that may be allocated to such an expense center.
Compare and contrast an expense center and an investment center.
What purpose is served by setting transfer prices?
What is the advantage of using investment centers as a basis for performance evaluation?
Which categories of items must a segment manager have control over for the investment center concept to be applicable?
What is the connection between the extent of decentralization and the investment center concept?
Exercise B
Present the following information for the Hardware Division of ABC Computer Company,
Sales $ 1,400,000
Variable selling and administrative expenses 100,000
Fixed direct manufacturing expenses 35,000
Fixed indirect manufacturing expenses 56,000
Variable manufacturing expenses 400,000
Fixed direct selling and administrative expenses 175,000
Fixed indirect selling and administrative expenses 28,000
Exercise C
Given the following data, prepare a schedule that shows contribution margin, contribution to indirect expenses, and net income of the Sharks Division of Hockey, Inc.:
Direct fixed expenses $ 324,000
Indirect fixed expenses 259,200
Sales 2,100,000
Variable expenses 1,500,000
What would be the effect on the company income if the segment were eliminated?