Question

a) Standard cost once fixed cannot be changed
b) Standard costs help in price fixing when demand is elastic
Of these.

• A. Both (A) and (B) are true
• B. (A) is false, but (B) is true
• C. (A) is true, but (B) is false
• D. Both (A) and (B) are false

Answer 1

The correct option is C (A) is true, but (B) is false

Standards are very rigid estimates and once set, are not changed for a considerable time. This makes the standards highly unrealistic in certain industries, which face fluctuations in prices of products due to frequent changes in material and labour costs.