XYZ Company uses standard costs for allocating costs to work-in-process and finished goods inventory.For the last few months,there have been high variances between total standard costs and actual costs.What is one of the likely reasons for this variance?
A)The accounting department has been developing the costs.
B)Production quantities are different than expected.
C)There is an increase in inventory quantities on hand.
D)The receiving department has been stockpiling raw materials.

Question

Quizplus · Accepted Answer

High variances between total standard costs and actual costs indicate that something is different than what was expected. One reason for this could be that production quantities are different than expected, leading to differences in the costs incurred. Other options provided are unlikely to cause such variances.

XYZ Company Uses Standard Costs for Allocating Costs to Work-In-Process