Which of the Following Is a Reason Companies Use Standard

question 4

Multiple Choice

Which of the following is a reason companies use standard costs?

• A) to enhance customer loyalty
• B) to ensure the accuracy of the financial records
• C) to share best practices with other companies
• D) to identify performance standards

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Definitions:

Fixed Cost

Costs that do not change with the level of production or business activity, such as rent, salaries, and insurance.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.

Break-Even Point

The point at which total costs and total revenue are equal, resulting in no net loss or gain.