In a standard cost system,the initial debit to an inventory account is based on:
A)standard cost rather than actual cost.
B)actual cost rather than standard cost.
C)actual cost less the standard cost.
D)standard cost less the actual cost.

Question

Quizplus · Accepted Answer

In a standard cost system, the initial debit to an inventory account is based on the standard cost rather than actual cost. Standard cost is a predetermined cost per unit of product, based on estimated costs of materials, labor, and overhead, whereas actual cost is the cost actually incurred in producing the product. The use of standard cost allows for easier comparison of actual costs to expected costs and can help identify areas for improvement in the production process. Therefore, the initial debit to the inventory account is based on the standard cost.

In a Standard Cost System,the Initial Debit to an Inventory