Discussion Questions

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Answer the following questions-

1. What are the basic objectives in the use of standard costs?

2. What are the two variances between the actual cost and the standard cost for direct materials?

3. The materials cost variance report for Nickols Inc. indicates a large factorable materials price variance and a significant unfavorable materials quantity variance. What might have caused these offsetting variances?

4. A new assistant controller recently was heard to remark, "All the assembly workers in this plant are covered by union contracts, so there should be no labor variances." Was the controller's remark correct? Discuss.

5. Would the use of standards be appropriate in a non-manufacturing setting, such as a fast food restaurant?

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