Standard Costing MCQs

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on March 25, 2022

This multiple choice question (MCQ) test covers standard costing. You can use it to assess how much you’ve learned about this topic.

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Frequently Asked Questions

What is the Standard Cost?

A Standard Cost is a predetermined unit cost based on expected direct materials quantities and expected direct labour time, and priced at a predetermined rate per unit of direct materials and rate per direct labour hour and rate per hour of overhead.

What is the primary benefit of a Standard Costing system?

A Standard Cost system can be valuable for top management in planning and decision-making. More reasonable and easier inventory measurements A Standard Cost system provides easier inventory valuation than an actual cost system. Under an actual cost system, unit costs for batches of identical products may differ widely.

What is the primary benefit of a Standard Costing system?

What is the primary benefit of a Standard Costing system?

What are the limitations of Standard Costing?

Three of the disadvantages that result from a business using Standard Costs are controversial materiality limits for variances, nonreporting of certain variances, and low morale for some workers.

What is an example of a Standard Cost?

One example is the cost of a bolt may remain the same regardless of how many bolts are produced. This is in contrast to a variable cost, which changes with production volume. A fixed cost, such as rent, does not change with production volume.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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