Standard costs may be used as a management tool to control costs by a.controlling these costs separately. b.either including standard costs and variances in the general ledger or controlling these costs separately. c.excluding standard costs and variances in the general ledger. d.including standard costs and variances in the general ledger.

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Tutorconsortium311 Tutorconsortium311 · Answer 1 · 2022-07-20T11:54:41+02:00

The correct option is, (b) either including standard costs and variances in the general ledger or controlling these costs separately.

The difference between a standard cost and an actual cost is known as a standard cost variance.
When a materially negative variance occurs, management takes appropriate action to address the situation.
This variance is used to track the expenditures incurred by a company.

The planned cost of a typical manufacturing process is the benchmark against which actual costs are measured.
Of course, the initial standard costs will need to be estimated if a new good, service, or process is to be used.

By establishing benchmarks for manufacturing costs and performance, standard costing seeks to reduce waste and boost operational efficiency.
Standard costing is not a distinct way of product costing; rather, it is a control mechanism.

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