Which of the following is a key purpose of standard costing?
A) Determining break-even production level
B) Allocating costs more accurately
C) Profit determination
D) Controlling costs

Question

Quizplus · Accepted Answer

The key purpose of standard costing is to control costs by setting predetermined costs for materials, labor, and overhead. By comparing actual costs to these predetermined costs, management can identify areas of inefficiency and take corrective action. Option A is incorrect because break-even production level is determined through cost-volume-profit analysis. Option B is partially correct as standard costing helps allocate costs to products or services, but this is not its primary purpose. Option C is incorrect because profit determination is a broad goal that can be achieved through various methods, not just standard costing.

Which of the Following Is a Key Purpose of Standard