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When considering setting standards for costing which of the following would NOT be considered
relevant?
A The normal level of activity should always be used for absorbing overheads.
B Average prices for materials should be used, encompassing any discounts that are regularly available.
C The labour rate used will be the rate at which labour is paid.
D Average material usage should be established based on generally accepted working practicesAnswer C.
I am unable to get answer as well as question. Please help Tutor.
If you will tell why other answers are incorrect it would be so nice of you.When calculating the standard cost we use the expected level of activity and the expected costs.
So A is relevant – the normal/expected level of activity is what is used.
B is relevant – the average price of materials is what we expect we will pay.
C is not relevant – it is not what we actually pay but what we expected to will pay
D is relevant – it is the usage of material that we expect will happen.
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