A Standard Cost System Should Be Designed to Generate and Report

question 98

Multiple Choice

A standard cost system should be designed to generate and report variances:

• A)Coincidental with regular 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.

---

Definitions:

Straight-Line Method

A depreciation method that allocates an equal amount of the depreciable cost of an asset to each year of the asset's useful life.

Capital Lease

An agreement that grants the lessee the right to use an asset for a long period, typically seen as a purchase by the lessee for accounting purposes.

Original Amount

The initial sum of money involved in a financial transaction, before any deductions, depreciation, or appreciation.

Guaranteed Residual Value

An assurance that an asset will have a specified value at the end of its lease term.