Q4SE - Horngren'S Financial And Managerial Accounting

Question

Matching terms

Match each term to the correct definition.

Terms Definitions

a. Benchmarking

b. Efficiency variance

c. Cost variance

d. Standard

1. Measures whether the quantity of materials or laborused to make the actual number of outputs is within thestandard allowed for the number of outputs.

2. Uses standards based on best practice.

3. Measures how well the business keeps unit costs ofmaterials and labor inputs within standards.

4. A price, cost, or quantity that is expected under normalconditions.

Step-by-Step Solution

Answer

Terms		Definitions
a	Benchmarking	Uses standards based on best practice.
b	Efficiency variance	Measures whether the quantity of materials or labor used to make the actual number of outputs is within the standard allowed for the number of outputs.
c	Cost variance	Measures how well the business keeps unit costs of materials and labor inputs within standards.
d	Standard	A price, cost, or quantity that is expected under normal conditions.

Step 1: Introduction to Benchmarking-

Benchmarking is a process of comparing the performance of an organisation to a predetermined goal or number how the organisation's productivity, efficiency, and competitiveness measures up to industry standards.

Step 2: Introduction to Efficiency variance-

Efficiency variance is the distinction between the actual unit utilization and the expected amount. The expected amount is generally the standard quantity of direct labor, machine usage time,direct materials, and etc that is assigned to a product.

Step 3: Introduction to Cost variance-

Cost variance is the distinction between the expense actually incurred and the budgeted amount of expense that ought have been incurred.

Step 4: Introduction to Standard-

Standard costing is the estimated price of a product or service and act of substituting an expected expense for the actual expense of an operation or product.