Asked by NURUL ASMIRA JAKIMIN on Jun 08, 2024
Verified
All of the following are advantages of standard costs except they
A) facilitate management planning.
B) are useful in setting selling prices.
C) simplify costing in inventories.
D) increase net income.
Standard Costs
Pre-established expenses expected in the production of goods or services, serving as benchmarks for financial planning.
Management Planning
The process of setting goals, defining strategies, and outlining tasks and schedules to achieve the objectives of an organization.
Selling Prices
The amounts for which goods or services are offered for sale to consumers or other businesses.
- Assess the use of standard cost for planning, controlling, and decision-making.
Verified Answer
CS
Campus SafetyJun 08, 2024
Final Answer :
D
Explanation :
Standard costs provide a benchmark for measuring actual costs and identifying variances, which can help management control costs and improve performance. However, they do not directly impact net income. In fact, if actual costs are higher than standard costs, a company may report lower net income due to unfavorable variances. Therefore, increasing net income is not an advantage of standard costs.
Learning Objectives
- Assess the use of standard cost for planning, controlling, and decision-making.