What Results from Implementing Standard Cost Systems in Manufacturing Environments

question 3

Multiple Choice

What results from implementing standard cost systems in manufacturing environments emphasize continuous improvement and just-in-time manufacturing and purchasing?

• A)The standard cost system enhances the operational control.
• B)The materials price variance may encourage the purchasing department to buy in smaller quantities to reduce inventories.
• C)Variances can be computed and presented in reports to higher-level managers.
• D)The operational level will benefit from the detailed computation of variances.

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Definitions:

Net Income

The total profit of a company after subtracting all expenses from revenue.

Preferred Dividends

Payments made to preferred stockholders, prioritized over dividends to common stockholders.

Common Stock

Common Stock represents equity ownership in a corporation, giving shareholders voting rights and a residual claim on corporate earnings and assets.

Market Price

The present cost at which a good or service may be purchased or sold within a market.