While calculating the costs of products and services, a standard costing system ________.
A) allocates overhead costs on the basis of the actual overhead-cost rates
B) uses standard costs to determine the cost of products
C) does not keep track of overhead cost
D) traces direct costs to output by multiplying the standard prices or rates by the actual quantities

Question

Quizplus · Accepted Answer

A standard costing system uses predetermined or "standard" costs for direct materials, direct labor, and overhead to determine the cost of a product or service. These standard costs are based on expected prices for materials and labor as well as expected overhead costs. By using standard costs, a company can more easily identify variances between expected costs and actual costs, and can take corrective action to improve profitability.

While Calculating the Costs of Products and Services, a Standard