Q8RQ - Horngren'S Financial And Managerial Accounting

Question

Question: What is a standard cost system?

Step-by-Step Solution

Answer

Answer

A standard costing system is a tool for preparing various budgets and controlling costs.

Step 1 Definition of Cost

The cost is the expenditure incurred by the company to produce or operate the regular business.

Step 2 Standard Cost system

In accounting, a standard costing system is a technique and a strategy used for planning a budget, managing and controlling the costs incurred by the company during the period, and evaluating the cost management performance of the company. The standard costing system also helps estimate the cost required for the business's manufacturing process.