Standard Costing
Definition of Standard Costing as it relates to Business, Accounting Principles, Cost Accounting
Standard costing is an accounting principle within cost accounting that assigns predetermined costs to units of production, based on standard quantities and prices for materials, labor, and overhead. It facilitates budgeting, performance evaluation, and decision-making in a business context, as it enables managers to compare actual and standard costs, identify variances, and take corrective actions when necessary. Standard costing simplifies the cost accounting process by establishing a consistent basis for cost calculations and providing valuable insights into cost behavior and efficiency.