COMMERCE 2AB3 Study Guide - Final Guide: Standard Cost Accounting, Management Accounting, Variable Cost

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 2AB3
• Professor: Karim Karim

Document Summary

True/false: overhead costs are a major part of costs for most companies more than 50% of all costs for some companies. Answer: true: at the start of the budget period, management will have made most decisions regarding. Difficulty: 1 the level of variable costs to be incurred. At the start of the budget period, management will have made most decisions regarding the level of fixed costs to be incurred. Difficulty: 1: one way to manage both variable and fixed overhead costs is to eliminate nonvalue- adding activities. In a standard costing system, the variable-overhead rate per unit is generally expressed as a standard cost per output unit. For calculating the cost of products and services, a standard costing system does not have to keep track of actual costs. The budget period for variable-overhead costs is typically less than 3 months: a favorable variable overhead spending variance can be the result of paying lower.