Standard cost means what the cost should be. Standard cost is predetermined cost of a unit of product, or an operation or a department or a process. Standard cost is the cost target to be achieved. Such cost targets are scientifically determined after consultation with engineers, production and other front line managers, purchase people etc. Historical cost data after due adjustment for changes in products, efficiency and technology etc. is also used for setting actual cost incurred is companies against the predetermined standard cost and investigation into deviations , made by means of variance analysis. Standard cost also forms the basis of standard cost budgets and sales price determination decisions.
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Jennifer edwards
what is the effect of standard costing in management decision process