A standard cost is
A) a cost which is paid for a group of similar products.
B) the average cost in an industry.
C) a predetermined cost.
D) the historical cost of producing a product last year.

Question

Quizplus · Accepted Answer

A standard cost is a predetermined cost that is established before the actual production or operation process takes place. This cost includes both direct and indirect costs and can be used as a basis for comparison with actual costs to evaluate performance and identify areas for improvement. Therefore, option C is the correct answer. A is incorrect as a standard cost is not necessarily paid for a group of similar products. B is incorrect as it refers to average cost, not standard cost. D is incorrect as standard cost is not based on historical cost but is instead predetermined.

A Standard Cost Is