Which of the Following Is Not a Limitation of Standard

question 104

Multiple Choice

Which of the following is not a limitation of standard costing system?

• A) Standard costing system takes a process perspective rather than a departmental perspective.
• B) Standard costing system becomes outdated easily.
• C) Standard costing systems do not encourage continuous improvement
• D) Standard costing system focuses on the consequences rather than the causes of variances.

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Definitions:

Capital Expenditures

Capital employed by a business to buy or enhance tangible assets like land, factories, or machinery to boost long-term business activities.

Period of Ownership

The duration for which an asset is owned by an individual or entity, affecting capital gains for tax purposes.

Estimated Useful Life

The expected timeframe during which an asset is likely to be functional and useful for its intended purpose before it becomes obsolete.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear, and tear, or obsolescence.