Question

Which of the following criticisms of standard costing systems is false? A. Variances concentrate on results rather than causes. B. Standard costing systems concentrate on activities. C. Standard costing systems place too much emphasis on direct labour costs and efficiency. D. Standard costing systems are too narrowly defined.

Answer 1

Option D

Sandard costing systems are too narrowly defined is False .

In accounting, a standard costing system is a tool for planning budgets, managing and controlling costs, and evaluating cost management performance. Standard costing is an important subtopic of cost accounting. Standard costs are usually associated with a manufacturing company’s costs of direct material, direct labor, and manufacturing overhead.

The disadvantages include that implementing a standard costing system can be time consuming, labor intensive, and expensive. If the cost structure of the production process changes, the standards have to be updated.