The First Step in Conducting a Cost Analysis Is To

question 34

Multiple Choice

The first step in conducting a cost analysis is to:

• A) Determine whether to use a full-cost or a contribution-margin approach
• B) Allocate natural costs to functional cost centers
• C) Break costs of revenues into relatively large blocks so that little meaning is lost within each block
• D) Determine which segment of the population most needs to be analyzed
• E) Specify the purpose for which the study is being done

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Definitions:

Revenue Price Variance

The difference between the actual revenue received from selling a product and the expected revenue, based on standard pricing.

Revenue Volume Variance

The difference between the planned and actual units sold multiplied by the planned sales price.

Total Revenue Variance

The difference between the actual total revenue earned and the expected total revenue in a period.

Direct Materials Price Variance

The difference between the actual cost of direct materials and the standard cost, multiplied by the quantity purchased.