Answered: Standard costs are used in companies…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 8DQ: Under what circumstances might the activity-based costing method provide more accurate product costs...

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Related questions

Question

Standard costs are used in companies for a variety of reasons. Which of the following is a benefit of using standard costs?

a. They are used to estimate the cost of inventory.

b. They are used to control costs.

c. They are used to plan direct materials, direct labor, and variable factory overhead.

d. all of these choices

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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