Standard Cost Method Definition:
Standard Cost Method method charges issued materials at a
predetermined or estimated price reflecting a normal or an expected
future price. The difference between the actual and standard cost is
recorded in a purchase price variance account. The variance account
enables management to observe the extent to which actual materials costs
differ from planned objectives or predetermined estimates. Materials are
charged into production at the standard price, Thereby eliminating the
erratic costing inherent in the actual cost methods. |
