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B Com Exam  >  B Com Tests  >  Test: Standard Costing - 1 - B Com MCQ

Test: Standard Costing - 1 - B Com MCQ


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10 Questions MCQ Test - Test: Standard Costing - 1

Test: Standard Costing - 1 for B Com 2024 is part of B Com preparation. The Test: Standard Costing - 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Standard Costing - 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Standard Costing - 1 below.
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Test: Standard Costing - 1 - Question 1
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What is the primary purpose of setting up cost centers in a standard cost system?

Detailed Solution for Test: Standard Costing - 1 - Question 1
Setting up cost centers in a standard cost system serves the primary purpose of identifying responsibilities for cost control. Cost centers are specific locations, individuals, or equipment where costs can be ascertained and used for the purpose of cost control. By establishing clear cost centers, an organization can assign responsibility for cost management to specific individuals or departments, making it easier to monitor and control costs.
Test: Standard Costing - 1 - Question 2
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Which type of standard is established for use over a limited period and is based on expected performance with reasonable allowances for losses?

Detailed Solution for Test: Standard Costing - 1 - Question 2
The type of standard that is established for use over a limited period and is based on expected performance with reasonable allowances for losses is known as "Current standards." Current standards are practical and attainable standards that consider expected performance under current conditions, making them suitable for cost control.
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Test: Standard Costing - 1 - Question 3
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What is the main objective of instituting a control mechanism on all elements of costs in standard costing?

Detailed Solution for Test: Standard Costing - 1 - Question 3
The main objective of instituting a control mechanism on all elements of costs in standard costing is to achieve cost reduction and control. Standard costing helps organizations monitor and control costs effectively, leading to improved cost efficiency and ultimately reducing overall costs.
Test: Standard Costing - 1 - Question 4
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Why is standard costing considered an economical system for businesses?
Detailed Solution for Test: Standard Costing - 1 - Question 4
Standard costing is considered an economical system for businesses because it reduces the need for detailed records and minimizes paperwork. Unlike some other cost accounting methods that require extensive record-keeping, standard costing relies on predetermined standards for various cost elements, streamlining the accounting process and saving both time and money.
Test: Standard Costing - 1 - Question 5
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What type of standard is based on the average performance in the past and aims to eliminate variations in costs due to trade cycles?
Detailed Solution for Test: Standard Costing - 1 - Question 5
The type of standard that is based on the average performance in the past and aims to eliminate variations in costs due to trade cycles is known as "Normal standards." Normal standards provide a challenge to staff and help maintain consistency in cost management.
Test: Standard Costing - 1 - Question 6
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How does standard costing contribute to inventory control?
Detailed Solution for Test: Standard Costing - 1 - Question 6
Standard costing contributes to inventory control by ensuring uniform pricing of stocks. When standard costs are applied to materials, work-in-progress, and finished goods, it simplifies the valuation of inventory. This consistency in pricing helps organizations maintain better control over their inventory levels and costs.
Test: Standard Costing - 1 - Question 7
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What is the primary purpose of setting standards for labor in a standard cost system?
Detailed Solution for Test: Standard Costing - 1 - Question 7
The primary purpose of setting standards for labor in a standard cost system is to determine standard hours for different tasks. By establishing standard hours for each task, organizations can measure actual labor performance against these standards, helping to identify areas for improvement and cost control.
Test: Standard Costing - 1 - Question 8
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Why is setting standards for material prices considered a challenging task?
Detailed Solution for Test: Standard Costing - 1 - Question 8
Setting standards for material prices is considered a challenging task because material prices are influenced by external factors that are often beyond the control of a company's management. These external factors, such as market conditions and supply and demand, can lead to fluctuations in material prices, making it difficult to establish precise standard prices.
Test: Standard Costing - 1 - Question 9
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What is the purpose of basic standards in a standard cost system?
Detailed Solution for Test: Standard Costing - 1 - Question 9
The purpose of basic standards in a standard cost system is to provide a basis for calculating variances. Basic standards act as a reference point against which actual performance is compared, allowing organizations to identify and analyze variations in costs and efficiency.
Test: Standard Costing - 1 - Question 10
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How does standard costing promote cost-consciousness among employees?
Detailed Solution for Test: Standard Costing - 1 - Question 10
Standard costing promotes cost-consciousness among employees by providing incentives and motivation for better efficiency. When employees are aware that their performance is being measured against established standards, they are more likely to work with greater effort to meet or exceed those standards. This increased effort leads to improved efficiency and productivity.
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