ECONOMICS

Detailed explanation-1: -Standard costs are estimates of the actual costs in a company’s production process, because actual costs cannot be known in advance. This helps a business to plan a budget.

Detailed explanation-2: -Standard Cost is budgeting the cost to produce one unit of an item. You establish and assign a set of costs for each production segment of the item-direct material, direct labor, indirect labor, and machine hours. These costs are used to record cost of production for all like items.

Detailed explanation-3: -Standard costing, also known as standard cost accounting, is used to set budgets and plan for future expenses. It is a type of cost accounting mainly used in the manufacturing sector because it is easier to allocate costs directly to products being produced.