Question

A system that records costs based on what managers think they should be rather than using actual costs is a(n) _______________ _____________ system

Answer 1

A standard cost system is one that records costs based on predetermined values instead of actual incurred costs, helping managers establish budgets and benchmarks.

Step-by-step explanation:

A system that records costs based on what managers think they should be rather than using actual costs is known as a standard cost system. This approach incorporates the tendency to rely on initial values, prices, or quantities when estimating the actual value, price, or quantity of something. Unlike actual costing, which records costs as they are incurred, a standard cost system uses predetermined costs for budgeting and assessing performance. Managers use these standard costs to establish budgets and benchmarks for controlling operations.

Answer 2

A system that records costs based on what managers think they should be rather than using actual costs is a standard costing system.

Step-by-step explanation:

The system that records costs based on what managers think they should be rather than using actual costs is a standard costing system.

This system relies on predefined budgeted costs and compares them to the actual costs incurred in production.

For example, if a manager estimates that the cost of producing a product should be $10, but the actual cost is $12, the standard costing system would record the cost as $10.