Which of the Following Is a Criticism of Standard Costing

question 97

Multiple Choice

Which of the following is a criticism of standard costing, as applied to today's manufacturing environment?

• A) Standards tend to be relevant for only a short period of time because of shorter product life cycles.
• B) Variance information is usually aggregated (i.e., combined) rather than associated with a particular batch of goods or a specific product line.
• C) Traditional standard costing has a fairly narrow orientation, failing to focus on broader issues such as the overall costs of ownership.
• D) Standard costing pays considerable attention to labor cost and labor efficiency, which are becoming a relatively unimportant factor of production.
• E) All of the answers are correct.

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Definitions:

Assets

Resources owned by a company from which future economic benefits are expected to flow to the entity.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.

Owner's Capital

The amount of equity a business owner has in the firm, representing the owner's personal investment plus any profits retained in the business.

Internal Control

Practices and procedures deployed by a company to verify the honesty of its financial and accounting figures, enhance responsibility, and eliminate swindling.