A Standard Costing System

question 16

Multiple Choice

A standard costing system

• A) is not typically used by management for cost planning and cost control purposes.
• B) is a system in which all costs affecting the three inventory accounts and the Cost of Goods Sold account are stated in terms of actual costs incurred.
• C) depends on actual costs rather than planned costs.
• D) is employed with an existing job order costing or process costing system and is not a full cost accounting system in itself.

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Definitions:

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers at various prices.

Market Wage Rate

The prevailing wage rate for a specific job in the labor market, determined by supply and demand for that type of work.

Marginal Product

The additional output that is produced as a result of adding one more unit of a specific input, while keeping other inputs constant.

Physical Productivity

A measure of the output produced (in terms of goods or services) per unit of input used (e.g., labor, raw materials) within a specific period of time.