A standard cost system initially records manufacturing costs at the standard rather than the actual amount.

Question

Quizplus · Accepted Answer

A standard cost system sets predetermined standards for manufacturing costs based on expected levels of efficiency and resource usage. These standards are then used to record costs during production, rather than recording the actual costs incurred. This allows for easier comparison of actual costs to expected costs and helps identify areas for improvement in the manufacturing process.

A Standard Cost System Initially Records Manufacturing Costs at the Standard