Advantages of standard costing
One of the stated advantages of standard costing is 'more stable product costs'.
i. List two other advantages of standard costing.
ii. Assume that the company's business activity has a strong seasonal pattern; namely, the volume of activity in the busiest month of the year is four times as large as the volume in the slowest month. Explain how standard costing gives more stable product costs in this situation. You may assume that, on average, fixed costs of production amount to more than half of the cost of the product.

Question

Quizplus · Accepted Answer

The Answer of Advantages of standard costing One of the stated advantages of standard costing is 'more stable product costs'. i. List two other advantages of standard costing. ii. Assume that the company's business activity has a strong seasonal pattern; namely, the volume of activity in the busiest month of the year is four times as large as the volume in the slowest month. Explain how standard costing gives more stable product costs in this situation. You may assume that, on average, fixed costs of production amount to more than half of the cost of the product.

Advantages of Standard Costing