Authoritative standards (within the context of a standard cost system) are determined primarily by:
A) A defined subset of the board of directors of a company.
B) Employees.
C) Negotiation.
D) A two-way information flow.
E) Managers.

Question

Quizplus · Accepted Answer

Authoritative standards in a standard cost system are primarily determined by managers, who are responsible for setting standards for various activities such as labor rates, material costs, and overhead rates. Managers have the responsibility to create, implement, and maintain the standard cost system within a company. While the board of directors may provide oversight, employees may provide input, negotiation may take place, and there may be a two-way flow of information, ultimately, it is the managers who have the authority to set and enforce standards within the standard cost system.

Authoritative Standards (Within the Context of a Standard Cost System)