The difference in standard price and standard cost of direct material is that
A)Standard price is the amount to produce one unit of product; standard cost is the amount paid to obtain one unit of material from a vendor
B)Standard price is the amount paid to obtain one unit of material from a vendor; standard cost is the amount to produce one unit of product.
C)Standard price is the amount added to work in process as material is put into production; standard cost is the amount to produce one unit of product.
D)Standard price is the amount to produce one unit of product; standard cost is the amount added to work in process as material is put into production.

Question

Quizplus · Accepted Answer

Standard price is the cost of purchasing one unit of direct material, while standard cost is the total cost of producing one unit of a product, including direct material, direct labor, and manufacturing overhead. Therefore, the difference between standard price and standard cost of direct material is that standard price is the amount paid to obtain one unit of material, while standard cost is the total cost to produce one unit of a product. Option B correctly states that standard price is the amount paid to obtain one unit of material.

The Difference in Standard Price and Standard Cost of Direct