The use of standard material or labor costs in job-order costing

Question

Quizplus · Accepted Answer

The use of standard material or labor costs in job-order costing is similar to the use of predetermined overhead rates in a normal costing system. Both aim to provide more accurate and consistent cost estimates for jobs by using predetermined rates based on historical data. This approach helps to ensure that actual costs do not fluctuate too much due to changes in component costs or labor rates, which can make it easier to manage costs and plan production. While this approach may not be appropriate for every company, it is commonly used in industries where customers require unique or specialized products.

The Use of Standard Material or Labor Costs in Job-Order