Which of the Following Best Describes the Concept of Standard

question 92

Multiple Choice

Which of the following best describes the concept of standard costs?

• A) They are the costs that should be incurred per unit of finished goods inventory.
• B) They are the costs that are actually incurred per unit of finished goods inventory.
• C) When using standard costs, unallocated overhead is capitalized.
• D) Standard costs are always acceptable for reporting purposes.

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Definitions:

Standard Price

A predetermined cost that companies use for budgeting and assessing performance, often used in cost accounting.

Direct Materials

Raw materials that can be directly traced to the production of goods, considered a variable cost.

Production Department

A division within a company responsible for the actual production of the goods or services the company sells, involving processes like manufacturing, assembly, or processing.

Nonfinancial Performance Measures

Metrics used to assess a company's operational and managerial performance that do not involve monetary values, such as customer satisfaction or employee turnover rates.