When a Manufacturing Company Uses a Standard Cost System,an Unfavorable

question 107

True/False

When a manufacturing company uses a standard cost system,an unfavorable variance is a contra expense.

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Definitions:

Standard Quantity

The expected amount of materials or input needed to produce a unit of output.

Actual Materials

The actual amount of materials used in the production process, measured in physical units or cost.

Standard Price

A predetermined cost for a unit of material, labor, or overhead anticipated in the budgeting process, against which actual costs are compared.

Actual Output

The real quantity of goods or services produced by a company, as opposed to planned or expected output.