Question

Using a standard cost system helps managers to...

A. Prepare the master budget
B. Set sales prices
C. Identify performance standards
D. All of those listed

Answer 1

Using a standard cost system helps managers to prepare the master budget, set sales prices, and identify performance standards.

Step-by-step explanation:

The correct answer is D. All of those listed.

Using a standard cost system helps managers in various ways:

1. Prepare the master budget: A standard cost system provides a framework for estimating costs and creating budgets for different departments or projects.
2. Set sales prices: By having a standard cost for each unit of product, managers can calculate the desired profit margin and set appropriate sales prices.
3. Identify performance standards: Standard costs serve as benchmarks for evaluating actual performance. Managers can compare actual costs with standard costs to identify areas of improvement or inefficiency.

Therefore, using a standard cost system helps managers in preparing the master budget, setting sales prices, and identifying performance standards.