BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Measuring efficiency
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Facilitates cost control
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Determination of variance
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All of the above
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Detailed explanation-1: -Improved cost control. More useful information for managerial planning and decision making. More reasonable and easier inventory measurements. Cost savings in record-keeping.
Detailed explanation-2: -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.
Detailed explanation-3: -Answer and Explanation: Standard costs are estimation of cost of production of one unit of product. It helps in controlling the actual cost of production and achieving efficiency by the organization. It however is nowhere related to setting of sales price.
Detailed explanation-4: -The purpose of standard costing is to control cost and promote efficiency.
Detailed explanation-5: -Cost accounting allows for data that enables the firm to measure efficiency. This could be efficiencies with respect to cost, time, expenses etc. Standard costing is then used to compare actual numbers with the industry or economy standards to indicate changes in efficiency.