This multiple choice question (MCQ) test covers standard costing. You can use it to assess how much you’ve learned about this topic.
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Standard Costing MCQs FAQs
A Standard Cost is a predetermined unit cost based on expected direct materials quantities and expected direct labour time, and priced at a predetermined rate per unit of direct materials and rate per direct labour hour and rate per hour of overhead.
A Standard Cost system can be valuable for top management in planning and decision-making. More reasonable and easier inventory measurements A Standard Cost system provides easier inventory valuation than an actual cost system. Under an actual cost system, unit costs for batches of identical products may differ widely.
The primary benefit of a Standard Costing system is a benchmark value called "standard value" that other acquisitions are compared against. The difference between the standard and the actual value is called a variance. Variances can be evaluated for a cause.
Three of the disadvantages that result from a business using Standard Costs are controversial materiality limits for variances, nonreporting of certain variances, and low morale for some workers.
One example is the cost of a bolt may remain the same regardless of how many bolts are produced. This is in contrast to a variable cost, which changes with production volume. A fixed cost, such as rent, does not change with production volume.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.