A standard cost system:
A) Cannot be used in conjunction with a job-cost system.
B) Is not permissible for financial-reporting purposes.
C) Is most easily introduced in conjunction with a process-cost system.
D) Is useful for planning but not control purposes.
E) Is useful for cost control but not planning purposes.

Question

Quizplus · Accepted Answer

A standard cost system can be most easily introduced in conjunction with a process-cost system, which involves mass production of identical or very similar units. It is difficult to implement a standard cost system in a job-cost system, which involves customized production of unique products or services. A standard cost system can be used for both planning and control purposes, by setting predetermined standards for cost and performance and comparing actual results against those standards. It is also permissible for financial-reporting purposes, as long as the standards are based on reasonable estimates and the variances are properly disclosed.

A Standard Cost System