A "Standard Cost" Is a Predetermined Amount (E

question 135

Multiple Choice

A "standard cost" is a predetermined amount (e.g., cost) that:

• A) Should be incurred under relatively efficient operating conditions.
• B) Will be incurred for an operation or a specific objective.
• C) Must occur for an operation or a specific objective.
• D) Cannot be changed once it is established by management.
• E) Is useful for planning and control, but not for inventory valuation purposes.

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Definitions:

Long-term Basis

An approach or strategy focused on goals, investments, or plans that extend beyond the immediate or short-term period.

Accounts Receivable Turnover

A ratio that measures how effectively a company collects its receivables or the efficiency of its credit policies.

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and operational efficiency.

Current Ratio

A liquidity ratio that measures a company's ability to cover its short-term obligations with its current assets.