Question

Once standard costs for products or services have been developed:

A. they must be updated monthly to be useful.
B. they can be used for more than planning and control purposes.
C. they need not be revised unless the product or service is modified.
D. performance reports must be issued if the standards are to be useful.

Answer 1

Standard costs can be used for more than planning and control purposes. They are helpful in evaluating performance, making decisions, and identifying areas for improvement.

Step-by-step explanation:

Once standard costs for products or services have been developed, they can be used for more than planning and control purposes. Standard costs are predetermined costs that are based on historical data and are used as benchmarks for comparison with actual costs. These costs are helpful in evaluating performance, making decisions, and identifying areas for improvement. By comparing actual costs to standard costs, management can determine if there are any deviations and take appropriate actions.

For example, if the standard cost for producing a product is $10 and the actual cost turns out to be $12, management can investigate the reasons for the deviation and take corrective actions. Standard costs can be used to analyze variances, which are the differences between actual costs and standard costs. These variances can be classified as favorable or unfavorable, depending on whether the actual costs are lower or higher than the standard costs.