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What is standard cost?

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posted Jun 21 by Divya Shree

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1 Answer

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Standard cost has been described as a predetermined cost, an estimated future cost, an expected cost, a budgeted unit cost, a forecast cost, or a “should be” cost. Standard costs are often a part of a manufacturer’s annual profit plan and operating budgets. Standard costs will be established for the following year’s direct materials, direct labor, and manufacturing overhead. If standard costs are used, there will be:
► A standard cost for each unit of input (e.g., $30 per hour of direct labor)
► A standard quantity of each input for each unit of output (e.g., 3 hours of labor for each product)
► A standard cost for each unit of output (e.g., $30 X 3 hours = $90 of direct labor per product)

answer Jun 22 by Naveen Kumar
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