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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Would the use of standards be appropriate in a nonmanufacturing setting such as a fast-food restaurant?

To determine

Standard Costs:

In the accounting records, the term standard cost refers to the practice of replacement of an expected cost for an actual cost. Then the difference between the expected costs and actual costs showing the variance are also recorded periodically. A standard costs is also known as target cost or predetermined cost. Generally, the manufacturing companies use standard costs for each of the three product costs which are given as follows:

  1. 1. Direct materials cost
  2. 2. Direct labor cost, and
  3. 3. Factory overhead cost

To identify: Whether the use of standards would be appropriate in a nonmanufacturing setting such as a fast-food restaurant.

Explanation

  • The use of standards would be appropriate in a nonmanufacturing setting such as a fast-food restaurant as the standards can be very appropriate in the service operations which are of repetitive in nature...

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