Question

Which of the following is a problem that could be encountered when using standard costs?

	a.	Efficiency could be enhanced by permitting a management-by-exception approach.
	b.	Standard costs help facilitate responsibility accounting.
	c.	Focusing solely on standards may impede an organization’s efforts toward continuous improvement.
	d.	Standard costs can simplify an organization’s bookkeeping process.

Answer 1

Ans is C

Focusing solely on standards may impede an organization’s efforts toward continuous improvement.

Reason:-

Options A, B, and D tells about the benefits of standard costs. However, only option C tells about the problem and hence it is a correct choice.

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