All of the Following Are Features of a Standard Cost

question 88

Multiple Choice

All of the following are features of a standard cost system except:

• A)Standards should not be adjusted.
• B)Standards provide incentives for workers to keep costs in line.
• C)Comparisons between actual and standard are more effective than comparisons between actual costs of the current period and those of the prior period.
• D)A standard cost system focuses management attention on materials prices and usages.

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Definitions:

Machine-Hours

A unit of measure indicating the duration machines are in operation in a manufacturing setting, critical in cost allocation and efficiency studies.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated before the period begins based on estimated costs.

Variable Manufacturing Overhead

Costs incurred during the production process that vary with the level of production, such as utilities for the manufacturing plant.

Direct Labor-Hours

A measure of the labor time directly involved in the production of goods or services, typically used as a basis for allocating manufacturing overhead costs.