A Purpose of Standard Costing Is to

question 7

Multiple Choice

A purpose of standard costing is to

• A)replace budgets and budgeting.
• B)simplify costing procedures.
• C)eliminate the need for actual costing for external reporting purposes.
• D)eliminate the need to account for year-end underapplied or overapplied manufacturing overhead.

---

Definitions:

Net Present Value

An investment's difference between the present value of cash inflows and the present value of cash outflows over time.

Monthly Interest Rate

The interest rate applied on a monthly basis to loans or savings, affecting the amount of monthly interest payments or earnings.

Variable Cost

Costs that vary directly with the level of production or output.

Net Present Value

A valuation method that calculates the difference between the present value of cash inflows and outflows over a period, used to assess the profitability of an investment.