Asked by sonu ann sunny on Jul 28, 2024
Verified
In which of the following situations would the use of a standard cost system to control labour costs not necessarily yield useful results?
A) A business is employing responsibility accounting.
B) The bookkeeping systems charges materials, labour and overhead costs to work-in process inventory using standard costs.
C) In addition to the full monthly standard cost reports the business uses a system where variances are estimated on weekly basis.
D) The pace of production is constrained by machine processing speeds.
Standard Cost System
An accounting system that uses predetermined costs for products or services to facilitate variance analysis and budgeting.
Direct Labour Hours
Total hours accumulated by workers directly involved in the fabrication process.
Direct Materials Inventory
The total cost of raw materials that are directly involved in the manufacturing of a product and are currently held in inventory.
- Understand the concept of standard costing and its applications in manufacturing.
- Recognize the limitations and challenges of implementing a standard costing system.
Verified Answer
CM
Chemika MetayerJul 28, 2024
Final Answer :
D
Explanation :
Standard cost systems are less effective for controlling labor costs when production pace is constrained by machine processing speeds, as labor efficiency is heavily influenced by machinery rather than labor efforts alone.
Learning Objectives
- Understand the concept of standard costing and its applications in manufacturing.
- Recognize the limitations and challenges of implementing a standard costing system.