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Q: Which one of the following best defines standard costing in a system of budgeting?
A) all activities are examined without reference to history each year
B) output level and costs are predetermined, actual results then compared with these
predetermined costs and variances analysedC) actual costs are compared with predetermined costs for the level of activity
D) costs are assigned to a manager in order that controllable and non-controllable costs
are accounted forI choose B but CORRECT ANSWER IS C
What’s the difference between option B & C and why C is correct not B ?
Can you do explain me this clearlyB implies a broader approach where both output levels and costs are set in advance, and actual results are compared against these predetermined figures.
Whilst C specifically emphasises that the comparison is made strictly between actual costs incurred and the predetermined costs that correspond to the actual level of activity, which is a key aspect of standard costing.
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