Standard Costs: Definition & Advantages

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Kelly started a business selling birdhouses. They cost her $15 to make, and she sells them for $75 each. What is the gross profit for this item?

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1. Which of the following is NOT true about gross profit?

2. Which of the following is NOT an element of the cost of an item?

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About This Quiz & Worksheet

This interactive quiz and printable worksheet will assess your understanding of standard costs and their benefits. Subjects of practice questions include gross profit, cost, and standard cost.

Quiz & Worksheet Goals

This quiz will test students on:

  • Elements of cost
  • Gross profit
  • Advantages to the standard cost method
  • Standard cost variance

Skills Practiced

In this work, you will demonstrate your skill in:

  • Reading comprehension - ensure that you draw the most important information from the related lesson on standard costs
  • Interpreting information - verify that you can read information regarding the standard cost method and interpret it correctly
  • Information recall - access the knowledge you've gained regarding gross profit
  • Knowledge application - use your knowledge to answer questions about variances

Additional Learning

Consult the associated lesson named Standard Costs: Definition & Advantages to continue your learning. This lesson looks at the following objectives:

  • Define gross profit, standard cost and other relevant terminology
  • Solve for standard cost given examples in the lesson
  • Understand the advantages of using the standard cost method
  • Differentiate between favorable and unfavorable variances in standard cost
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