Standard Costs Are Said to Be Useful in Performance Evaluation

question 17

Essay

Standard costs are said to be useful in performance evaluation. Assume that the standard direct materials cost per unit of finished product is $6 (three pounds at $2 per pound).
Required:
A. Explain how such a standard can be used to evaluate performance.
B. Why is the degree of controllability important when utilizing standard costs to evaluate performance?

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Definitions:

Group

A collection of individuals who interact with one another, share similar characteristics, and collectively have a sense of unity or identity.

Extraversion

A personality trait characterized by sociability, talkativeness, assertiveness, and a high level of energy and enthusiasm.

Job Performance

Job performance is the measure of how well an individual executes their work tasks and responsibilities within their professional role.

Conscientiousness

A personality trait characterized by thoroughness, carefulness, and the desire to do a task well.