The following statements relate to standard costing systems:
I Traditional standard costing systems focus too much on the cost and efficiency of direct labor which is rapidly becoming a relatively unimportant factor of production
II Traditional standard cost variances are too aggregated in the sense that they are not tied to specific product lines, production batches, or flexible manufacturing systems
III Traditional standard costing systems tend to focus too much on cost minimization rather than increasing product quality or customer service
IV Traditional standard costing is not defined broadly enough to capture various important aspects of performance
Which of these statements relate to disadvantages of standard costing under modern cost management systems?
A) I
B) I, II
C) I, II, III
D) I, II, III, IV

Question

Quizplus · Accepted Answer

All four statements (I, II, III, IV) describe recognized disadvantages of traditional standard costing systems in the context of modern cost management practices. These include an outdated focus on direct labor costs, overly aggregated variance analysis, a narrow focus on cost minimization over quality or service, and a lack of broad performance metrics.

The Following Statements Relate to Standard Costing Systems