Setting performance standards is a key component of cost control, as it provides benchmarks for evaluating performance.

Traditional costing methods may lead to cost distortion as they often allocate overhead costs based on a single volume measure.

Traditional costing systems can lead to overcosting or undercosting of products due to their simplistic allocation methods.

Standard costing is a method of cost control that compares actual costs to standard costs.

Direct materials vary with the level of production, making them a variable cost.

Direct materials costs vary directly with the level of production.

Budgeting does not guarantee profit; it helps in planning and controlling costs but does not ensure financial success.

Marginal costing does not provide detailed fixed cost analysis as it primarily focuses on variable costs.

Marginal costing does not provide detailed fixed cost analysis as it primarily focuses on variable costs.

Fixed costs do not vary with production levels; they remain constant in total.

Marginal costing does not absorb fixed costs into product costs; it treats them as period costs.

A flexible budget adjusts for changes in sales volume and includes variable and fixed costs, but does not directly include historical data.

A variance budget is not a component of a master budget; it is a tool used for analysis after the budget is implemented.

Actual cost incurred is not a component; standard costs are predetermined.

Cost allocation is not a direct component of cost control; it is more about distributing costs rather than controlling them.

Fixed costs are not a component of the contribution margin; it is calculated as Sales Revenue minus Variable Costs.

Opportunity cost is not a direct component of total cost in cost control.

In marginal costing, fixed manufacturing overhead is not included in the total cost of the product; only variable costs are considered.

Selling expenses are not considered a component of total cost in production; they are period costs.

Marginal costing is often used to decide whether to accept special orders at lower prices, as it focuses on variable costs.

Direct costs can be directly traced to a specific product, unlike indirect costs.

The material price variance measures the difference between actual costs and standard costs for direct materials.