Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits of using standard costs?
A) used to indicate where changes in technology and machinery need to be made
B) used to estimate cost of inventory
C) used to plan direct materials, direct labor, and variable factory overhead
D) used to control costs

Question

Quizplus · Accepted Answer

Standard costs are primarily used to plan and control costs. While they may indirectly indicate the need for changes in technology or machinery, that is not their primary purpose. Standard costs are also used to estimate the cost of inventory and plan for direct materials, direct labor, and variable factory overhead.

Standard Costs Are Used in Companies for a Variety of Reasons