Standard cost is the:
APlanned unit cost
BActual unit cost
CAverage cost
DReplacement cost
Answer & Solution
Correct answer: A. Planned unit cost
1. CIMA defines standard cost as the planned unit cost of a product or service.
2. It is set in advance using engineering studies, historical data, and expected conditions.
3. Actual cost is what is incurred; standard cost is what was planned.
4. Hence standard cost is the planned unit cost.
_Source: ICAI BoS Inter Paper 3, Ch 13 "Standard Costing", §13.1.1 ¶1_
Related questions
Standard costing aids in inventory valuation because:Sales price variance equals:Same data: Fixed overhead capacity variance equals:Same data: Fixed overhead efficiency variance equals:Same data: Fixed overhead volume variance equals:Budgeted fixed overhead ₹1,20,000 for 20,000 standard hours; actual hours 18,000; actual oSame data: Labour efficiency variance is:Same data: Labour rate variance is: