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.

Other Related Accounting Articles:

• Standard Costing
• Direct Material Price Variance
• Materials Quantity Variance Definition
• Materials Price Variance Definition
• Standard Cost
• Sales Price Variance
• Direct Material Usage Variance
• Labor Efficiency Variance Definition
• Labor Rate Variance Definition
• Specific Cost Method Definition