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How do you describe the value of standard costs

How do you describe the value of standard costs

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Answer #1

Answer

As the name suggest Standard Cost is the cost which is Pre-determined Cost which is decided by the company before starting an operation, project, task...etc

It is the estimate of the Future Cost which company determines before starting the project.

It is the part of Planning for the company.

It helps the company to compare i.e. if they are able to keep the cost in check or not i.e. by comparing Standard Cost with Actual Cost.

For Example

Company A standard Cost is $10 per unit and it actually cost them

(a) $11 per dollar

(b) $9 per dollar

(a)

Company is not able to check the cost as it purchased the units for $11 per dollar and it is Un-favourable for the Company.

(b)

Company is able to check the cost as it purchased the units for $9 per dollar and it is favourable for the Company.

Dear Student, if u have any query, plz feel free to reach me.

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