If Standard Cost Reports Emphasize Meeting Predetermined Standards

question 37

Multiple Choice

If standard cost reports emphasize meeting predetermined standards

• A)there should be non-financial performance measures available to management to supplement the cost reports.
• B)management can control the department properly with standard cost reports.
• C)the budget process should be sufficient to support management's performance.
• D)all members of the team will be able to properly identify critical variance issues.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed overhead—in the cost of a product.

Net Operating Income

A measure of a company's profitability from its core business operations, excluding taxes and interest expenses.

Direct Labor Cost

The total cost of workforce directly involved in the production of goods or services, excluding indirect labor such as administration.

Variable Costing

A costing technique that only assigns variable production costs to inventory, helping managers understand the impact of production levels on total costs.