These studies are often used to determine how long it usually takes to perform a given task. That "usual time" becomes the standard.
When standard costs are used, items are added to inventory at their standard costs. Variances between actual incurred costs and the standard costs may be resolved by adjusting both inventories and cost of goods sold; or they may be resolved by adjusting only cost of goods sold. But the initial debit to inventory is for the standard cost amount. Therefore, this is a true statement.
Standard costs are reviewed periodically to account for any market changes. Annually during budget time is frequently the review period for standard costs.
This is the correct answer because it is not a correct statement. The statement is actually flipped around. Standards are stated on a per unit basis, while budgeted figures are stated in total.
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