ECONOMICS

Detailed explanation-1: -Standard costing involves setting predetermined costs for materials, labor, and overhead and then using these costs to produce a product or service. The goal is to produce a product or service at the lowest possible cost while meeting quality standards.

Detailed explanation-2: -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-3: -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.

Detailed explanation-4: -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.

Detailed explanation-5: -Overview: What is a standard cost? Standard costs are estimates of the cost of goods sold–that is, the cost required to produce your products. They usually consist of three parts: direct materials, direct labor, and manufacturing overhead.