When deciding whether or not to adopt standard costs and perform variance analysis, management should do which of the following?
A)Examine the costs and benefits of a standard costing system
B)Update inaccurate standard costs
C)Adopt lean thinking
D)Increase automation of assembly lines

Question

Quizplus · Accepted Answer

Management should examine the costs and benefits of a standard costing system before deciding whether or not to adopt it. This includes considering the potential costs of implementing the system, such as the time and resources required to establish accurate standard costs, as well as the potential benefits of using the system, such as improved cost control and more accurate budgeting. Updating inaccurate standard costs, adopting lean thinking, and increasing automation of assembly lines may all be relevant considerations in implementing a standard costing system, but they do not directly relate to the decision of whether or not to adopt such a system.

When Deciding Whether or Not to Adopt Standard Costs and Perform