Question

Standard costs are comprised of two elements:

A. the quantity of input and the cost per unit of input.
B. the quality of input and the cost per unit of input.
C. the quantity of input and the cost per unit of output.
D. the quality of input and the cost per unit of output.

Answer 1

Standard costs are comprised of two elements: the quantity of input and the cost per unit of input, and the quality of input and the cost per unit of output.

Step-by-step explanation:

Standard costs are comprised of two elements:

1. The quantity of input and the cost per unit of input: This refers to the quantity of raw materials or labor used in the production process and the cost per unit of each input. For example, if a company uses 10 units of raw material at $2 per unit, the total cost of input would be 10 * $2 = $20.
2. The quality of input and the cost per unit of output: This refers to the quality or grade of the input materials used and the cost per unit of the final output. Higher-quality inputs may result in higher costs per unit of output. For instance, if a company uses high-quality raw materials that cost $4 per unit to produce a widget, the cost per unit of output would be $4.