A: Standard costing is a system of cost control. R: It involves comparing standard costs with actual costs to find variances. Choose the correct option.
A.Both A and R are true and R is the correct explanation of A
B.Both A and R are true but R is NOT the correct explanation of A
Explanation:
Standard costing controls costs by setting predetermined standards and analyzing deviations (variances) from these standards. R correctly describes the core mechanism of standard costing.
S1: In standard costing, the 'Labour Efficiency Variance' is calculated as (Standard Hours for Actual Production - Actual Hours Worked) x Standard Rate. S2: If the actual hours worked are less than the standard hours, the variance is favorable. Which statement(s) is/are correct?
Explanation:
Both statements are correct. The formula for Labour Efficiency Variance is (SH - AH) x SR. If AH < SH, the result is positive, indicating a favorable variance (less time taken than standard).
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