What is the Standard Cost?

A Standard Cost is a predetermined unit cost based on expected direct materials quantities and expected direct labour time, and priced at a predetermined rate per unit of direct materials and rate per direct labour hour and rate per hour of overhead.

What is the primary benefit of a Standard Costing system?

A Standard Cost system can be valuable for top management in planning and decision-making. More reasonable and easier inventory measurements A Standard Cost system provides easier inventory valuation than an actual cost system. Under an actual cost system, unit costs for batches of identical products may differ widely.