Which of the following are benefits of standard costing?
I. It makes employees more aware of the impact of costs on operations
II. It serves as a target against which to evaluate performance
III. It eliminates the need to compute variances
IV. It is a cheap way of valuing inventory
A) I, II, III and IV.
B) I, II and IV only.
C) II, III and IV only.
D) I and II only.

Question

Quizplus · Accepted Answer

Option I is correct because standard costing promotes awareness of cost impacts on operations. It allows for employees to measure their performance and monitor their work. Option II is correct because standard costing is a measure of performance to be evaluated against. Option III is incorrect because standard costing is used to compute variances, so it would not eliminate the need to compute them. Option IV is correct because standard costing is one method of valuing inventory, but it is not necessarily the cheapest way.

Which of the Following Are Benefits of Standard Costing