Page 410 - F2 - MA Integrated Workbook STUDENT 2018-19

Chapter 15

Test your understanding 13

Tick

Favourable material usage 

Adverse material usage

Favourable labour efficiency 

Adverse labour efficiency

Favourable labour rate

Adverse labour rate 

Favourable variable overhead efficiency 

Adverse variable overhead efficiency

Test your understanding 14

Are the following statements regarding standard costing true or false?

True False

Standard costing cannot be applied in an organisation that 
manufactures specialist furniture to customer’ specifications
because every cost unit is unique

A standard is a benchmark measurement of resource usage 
or profit generation set in defined conditions

To reconcile the budgeted contribution to the actual 
contribution, deduct adverse cost variances and favourable
sales variances and add on favourable cost variances and
adverse sales variances

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