A critical characteristic of a standard cost is precision. That means that it’s not always the same as a budget, which might be more of a “stretch goal”.

A critical characteristic of a standard cost is precision. That means that it’s not always the same as a budget, which might be more of a “stretch goal”.

Consider that sales prices are determined based on these total costs. If the standard is wrong then so might be the sales price.

Why might “padding” the standard cost of a product lead to lost sales revenues?

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