For Improved Financial Control, a Standard Cost System Should Be

question 48

Multiple Choice

For improved financial control, a standard cost system should be designed to generate and report cost and revenue variances:

• A) Coincidental with regular financial-reporting intervals.
• B) As soon as possible.
• C) Only when significant in amount.
• D) Only when negative in impact.
• E) Only when requested by decision-makers/managers.

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Definitions:

Inventory

The total amount of goods and materials held by a company that are ready for sale or in the process of being produced.

Perpetual Inventory System

The inventory system in which each purchase and sale of merchandise is recorded in an inventory account.

Control Over Inventory

The process of managing and regulating the supply, storage, and accessibility of inventory to ensure sufficient quantities without excessive surplus.

Periodic Inventory System

The inventory system in which the inventory records do not show the amount available for sale or sold during the period.