The Key to Effective Cost Control Is to

question 14

Multiple Choice

The key to effective cost control is to

• A) aggressively address negative cost variances and cost inefficiencies as soon as they are identified.
• B) aggressively address positive cost variances and cost inefficiencies as soon as they are identified.
• C) extend the project schedule to complete the project in time.
• D) all the project to continue and improve.

Understand the basic principles of accounting and the role of accounting in businesses.

Comprehend the differences between various types of business organizations and their characteristics.

Identify the users of accounting information and their specific needs.

Understand the key financial statements and their significance.

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Definitions:

Direct Labor Cost

The total cost of all labor directly involved in the production of goods or services.

Standard Cost System

An accounting framework where standard costs are used for cost control and decision making, typically involving the setting of predetermined costs for products and services.

Labor Efficiency Variance

The difference between the actual labor hours used in production and the standard labor hours expected, multiplied by the labor rate.

Work in Process

Goods partially completed during the manufacturing process, not yet ready for sale.