Asked by Devin Usher on Jul 18, 2024
Verified
The difference between a budget and a standard is that
A) a budget expresses what costs were while a standard expresses what costs should be.
B) a budget expresses management's plans while a standard reflects what actually happened.
C) a budget expresses a total amount while a standard expresses a unit amount.
D) standards are excluded from the cost accounting system whereas budgets are generally incorporated into the cost accounting system.
Budget
A financial plan for a defined period, often one year, that is used to plan for future revenue and expenses.
Standard
Refers to an established norm or requirement in various contexts, such as quality, behavior, or operations.
- Learn about the concept and deployment of standard costs and budgets in the field of managerial accounting.
- Differentiate between various types of standards such as ideal, normal, and tight standards.
Verified Answer
KV
Katherine VickersJul 21, 2024
Final Answer :
C
Explanation :
A budget typically outlines the overall financial plans of a business, including total revenues and expenditures for a specific period. On the other hand, a standard refers to a cost or revenue that should be achieved per unit; it is a benchmark or a specific criterion against which actual results can be measured. This distinction highlights that budgets deal with total amounts, while standards focus on specific, per-unit amounts.
Learning Objectives
- Learn about the concept and deployment of standard costs and budgets in the field of managerial accounting.
- Differentiate between various types of standards such as ideal, normal, and tight standards.