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Question 18 Indicate whether the following statements are true or false: 1. 10. The standards that are imposed by government agencies are often called regulations. One of the differences between a standard and a budget is that a standard is a unit amount and a budget is a total amount. A company may report its inventories at either standard cost or budgeted cost in its financial statements. Ideal standards represent efficient levels of performance that are attainable under expected operating conditions. Most companies that use standards set them at a normal level. The direct materials price standard is the cost per unit of direct materials that should be incurred based on the purchasing department's best estimate of the cost of raw materials. In setting the direct materials standard, management considers only the quantity of materials that are required to manufacture the product as quality is not relevant. The direct labour price standard is the rate per hour that should be incurred for direct labour based on current wage rates and is adjusted for any expected changes. The standard direct labour cost per unit is the standard direct labour rate times the actual direct labour hours. For manufacturing overhead, a standard predetermined overhead rate is used in setting the standard. 4} 4} 4} 4} 4} 4} 4} 4} 4} 4