Chapter 8

6. The purchasing agent is responsible for developing the direct materials quantity standard.

a. True

b. False

7. The standard overhead cost is the sum of the estimates of variable and fixed overhead costs in the next accounting period.

a. True

b. False

8. The standard fixed overhead rate is usually based on the expected number of standard labor hours.

a. True

b. False

9. Variance analysis involves computing the difference between standard and actual costs.

a. True

b. False

10. Corrective action is necessary even if a variance is insignificant.

a. True

b. False