ECONOMICS

Detailed explanation-1: -Standard costs are the scientifically predetermined costs of manufacturing a single unit or several units of product or rendering service during a specified future period. The Chartered Institute of Management Accountants, London, defines standard cost as “a standard expressed in money.

Detailed explanation-2: -The standard cost is an expected amount paid for materials costs or labor rates. The standard quantity is the expected usage amount of materials or labor. A standard cost may be determined by past history or industry norms.

Detailed explanation-3: -A standard cost is a predetermined unit cost based on expected direct materials quantities and expected direct labour time, and priced at a predetermined rate per unit of direct materials and rate per direct labour hour and rate per hour of overhead.

Detailed explanation-4: -Answer and Explanation: Option (D) is the correct answer. Standard cost is used as the tool for measuring efficiency for controlling the cost of production. Standard cost is part of the cost accounting process.

Detailed explanation-5: -Standard cost is used to identify the variances between the actual cost incurred and the cost that should have occurred to produce the goods in normal conditions.