What Is an Advantage of Standard Costing Over Normal Costing

question 119

Multiple Choice

What is an advantage of standard costing over normal costing and actual costing?

• A) provides a greater capacity for control
• B) provides limited availability of unit cost information
• C) makes it necessary to compute a unit cost for each equivalent unit cost category
• D) makes it easy to distinguish the FIFO and weighted average methods of accounting for beginning inventory costs

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Definitions:

Milling Department

A department within a manufacturing facility where raw materials are ground, crushed, or cut into small pieces using machines like mills.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to products, calculated by dividing estimated overhead costs by an allocation base, like direct labor hours or machine hours, before the period begins.

Forming Department

A specific section within a manufacturing process where materials are shaped or formed into parts or products.

Machine-Hour

A unit of measure indicating the operating time of a machine, used in costing to allocate expenses based on machine use.