Which of the following conditions would NOT normally indicate that standard costs for accrued expenses should be revised?

• A. A temporary fluctuation in the cost of raw materials
• B. A permanent change in wage rates
• C. The introduction of new technology affecting efficiency
• D. A significant change in the method of production

Answer: (A)

Verified step by step guidance

1. Understand the concept of standard costs: Standard costs are predetermined costs used for budgeting and performance evaluation. They are typically revised when there are permanent changes in cost factors or production methods.
2. Analyze each condition provided in the problem: Determine whether each condition represents a temporary or permanent change that would justify revising standard costs.
3. Condition 1: 'A temporary fluctuation in the cost of raw materials' - Temporary fluctuations are short-term and do not typically warrant revising standard costs, as standard costs are meant to reflect long-term expectations.
4. Condition 2: 'A permanent change in wage rates' - Permanent changes in wage rates directly affect labor costs and would justify revising standard costs to reflect the new reality.
5. Condition 3 and 4: 'The introduction of new technology affecting efficiency' and 'A significant change in the method of production' - Both conditions represent permanent changes in production processes or efficiency, which would necessitate revising standard costs to align with the new operational standards.