ECONOMICS

Detailed explanation-1: -In most businesses, cost standards are established principally by accountants. It is correct to rely exclusively on past cost data when establishing standards. Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials spoilage.

Detailed explanation-2: -A standard cost may be determined by past history or industry norms. The company can then compare the standard costs against its actual results to measure its efficiency. Sometimes when comparing standard costs against actual results, there is a difference. This difference can be attributed to many reasons.

Detailed explanation-3: -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. Standard cost is a predetermined cost.

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 an estimated cost determined by the company for the production of the goods and services or operating under normal circumstances and is derived by the company from the historical analysis of the data or from the time and the motion studies.