Multiple Select QuestionSelect all that applyStandard costs have which of the following characteristics? (Check all that apply.)Multiple select question.they are preset costs for delivering a product or service under normal conditionsthey are developed by the SCAB (Standard Cost Accounting Board)they are used to help management understand reasons for variancesthey are useful for manufacturing companies, but not service companiesproduction managers help determine production requirements for a unit of product
Question
Multiple Select QuestionSelect all that applyStandard costs have which of the following characteristics? (Check all that apply.)Multiple select question.they are preset costs for delivering a product or service under normal conditionsthey are developed by the SCAB (Standard Cost Accounting Board)they are used to help management understand reasons for variancesthey are useful for manufacturing companies, but not service companiesproduction managers help determine production requirements for a unit of product
Solution
The correct answers to this question are:
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Standard costs are preset costs for delivering a product or service under normal conditions. This is because standard costs are estimated or predetermined costs of performing an operation or producing a good or service, under normal conditions.
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Standard costs are used to help management understand reasons for variances. They are used as a control tool to understand the difference between actual performance and standard performance.
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Production managers help determine production requirements for a unit of product. This is because production managers are involved in the planning and coordination of production processes, which includes determining the resources needed to produce a unit of product.
The incorrect answers are:
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Standard costs are developed by the SCAB (Standard Cost Accounting Board). This is incorrect because there is no such entity as the Standard Cost Accounting Board. Standard costs are usually developed internally by a company's management team.
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Standard costs are useful for manufacturing companies, but not service companies. This is incorrect because standard costs can be used in both manufacturing and service industries. In service industries, standard costs can be used to measure the cost of delivering a service, such as the cost of a hotel room per night or the cost of a flight per passenger.
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