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

Question

Quizplus · Accepted Answer

Standard costs are primarily used for budgeting, cost control, and decision-making purposes, including estimating inventory costs (B) and planning for materials, labor, and overhead (C). They also help in controlling costs (D). However, indicating where changes in technology and machinery need to be made (A) is not a direct benefit of using standard costs, as this involves strategic decisions beyond the scope of standard costing.

Standard Costs Are Used in Companies for a Variety of Reasons