Chapter 29 – Controlling Manufacturing Costs: Standard Costs
Chapter 29
Controlling Manufacturing Costs: Standard Costs
1. If the standard cost for an item exceeds the actual cost, the variance is favorable.
2. If a price variance for materials is unfavorable, the quantity variance for materials also must
be unfavorable.
3. If the predetermined overhead application rate is a percentage of labor cost, then a
favorable labor time variance will be accompanied by a favorable manufacturing overhead
variance.
