Which of the following statement is incorrect concerning standard costing and/or variance calculations? A. Price (rate) standards represent the expected cost per unit of input. B. Standards are used at the beginning of the period during to budget and at the end of the period to evaluate performance. C. Variances falling outside of an acceptable range of outcomes do not require investigation. D. A price (rate) variance calculates the difference between what a company paid and what it expected to pay for its production input. E. A favorable quantity (efficiency) variance indicates that a company used less input than allowed for the actual level of output.

Question

Business

Guillermo

9 September, 21:12

Which of the following statement is incorrect concerning standard costing and/or variance calculations? A. Price (rate) standards represent the expected cost per unit of input. B. Standards are used at the beginning of the period during to budget and at the end of the period to evaluate performance. C. Variances falling outside of an acceptable range of outcomes do not require investigation. D. A price (rate) variance calculates the difference between what a company paid and what it expected to pay for its production input. E. A favorable quantity (efficiency) variance indicates that a company used less input than allowed for the actual level of output.

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Keira Hickman · Answer 1

C. Variances falling outside of an acceptable range of outcomes do not require investigation.

Explanation:

The purpose of any business is to generate profit which is the difference between the revenues and all cost related to business.

In order to define suitable selling price and acceptable cost, all figures are to be set in standard range; any variance outside the standard, even lower or higher, must be investigated then the company can make proper adjustments.

In the end, the right standard is not only achievable but also maximize for the profit set.

So while other statements are true about standard and variance, the statement (C) is totally wrong because it said "Variances falling outside of an acceptable range of outcomes do not require investigation"