Standard Cost Accounting

Standard cost accounting is a method used in cost accounting to establish predetermined costs for products or services. These standard costs serve as benchmarks for measuring performance and controlling expenses. Companies compare actual costs incurred to these standards to identify variances, which can signal areas for improvement or efficiency. It helps businesses budget more effectively, manage resources, and make informed decisions by providing a clearer picture of expected costs versus actual spending. Ultimately, it aids in financial planning and operational efficiency, ensuring companies remain competitive and profitable.