When Recording Variances in a Standard Cost System

question 71

Multiple Choice

When recording variances in a standard cost system:

• A) Only unfavorable material variances are debited.
• B) Only unfavorable material variances are credited.
• C) Both unfavorable material and labor variances are credited.
• D) All unfavorable variances are debited.
• E) All unfavorable variances are credited.

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Definitions:

Freight Costs

Expenses incurred by a company to transport goods from one place to another.

Purchase Price

The amount of money paid to acquire a good, service, or asset.

Materials Quantity Standard

The established amount of materials that should be used for the production of a unit of goods.

Labor Quantity Standard

The benchmark or established norm for the amount of labor input required to produce a certain amount of output, reflecting efficiency expectations.