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TP 1.

LO 8.1How do you balance a firm’s need to succeed and the need for not asking the workers for perfection?

TP 2.

LO 8.1What type of firm would use standard costing? What type of firm would not use standard costing?

TP 3.

LO 8.2You started your own construction business and need to determine the cost of materials used to build one house, and how many materials you will need to do so.

  • Where would you begin to determine the standard price and quantity needs to build one house?
  • What would produce a difference between the standard cost to build a house and the actual cost? What would cause a favorable outcome? What would cause an unfavorable outcome?
  • What action might your company take if you had an unfavorable total direct materials cost variance?
TP 4.

LO 8.3Is labor a true variable cost?

TP 5.

LO 8.4Why would managers use a flexible budget? What information does it provide that a regular budget does not?

TP 6.

LO 8.4Fill in the blanks in the following flexible budget:

Percent of Capacity: ?, 100%, ?. Direct labor hours 3,600, ?, ?. Units of output 1,800, 2,000, 2,200. Variable overhead ?, $8,000, ?. Fixed overhead ?, $10,000, ?. Total overhead ?, $18,000, ?
TP 7.

LO 8.4Before automation became more prevalent, overhead was often calculated and allocated as a function of direct labor costs or direct labor hours. Why was this the case, and has this pattern changed?

TP 8.

LO 8.5In your opinion, is it important that an organization set standards and measure them monthly? Why or why not?

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