An Advantage of Standard Costing Is That It Gives Visibility

question 21

True/False

An advantage of standard costing is that it gives visibility to the variances that arise in the production process.

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Definitions:

Profitability

The ability of a company to generate earnings above its costs and expenses over time.

Margin of Safety

The difference between actual or projected sales and the break-even point; measures the risk of not covering fixed costs.

Liabilities to Stockholders' Equity

A ratio that measures the amount of liabilities a company has compared to its shareholders' equity.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in using its assets to generate sales or revenue; it is calculated by dividing net sales by average total assets.