An important advantage of a standard cost system is that standard costs:
A)Cause financial statements to be more comparable because different companies cost their inventories in the same manner.
B)Can be determined with great precision so that inventories are valued with complete accuracy.
C)Cause a lower net income,resulting in lower income taxes.
D)Focus attention on trouble spots and facilitate prompt corrective action.

Question

Quizplus · Accepted Answer

Standard costs act as a benchmark for the actual costs incurred, highlighting any variances. By focusing on the variances, management can identify areas where costs may be higher than anticipated and take corrective action. This can result in increased efficiency and cost savings.

An Important Advantage of a Standard Cost System Is That