Certified Supply Chain Professional (CSCP) Practice Exam

What are standard costs commonly associated with?

1. Revenue growth

2. Fixed and variable costs

3. Costs of a process including material and labor

4. Projected sales figures

The correct answer is: Costs of a process including material and labor

Standard costs are typically associated with the costs of a process, including material and labor. These are predetermined or estimated costs that businesses use as a benchmark for evaluating actual costs. By establishing standard costs for materials, labor, and overhead, companies can compare actual costs incurred during production against these standards to identify variances, manage budgets, and improve cost control. Standard costs play a crucial role in planning and controlling operations, facilitating budgeting processes, and providing insights into performance management. They are particularly useful in manufacturing environments where efficiency is key to profitability. While the other options pertain to relevant financial and operational concepts, they do not focus on the direct association with standard costs in the same way. Fixed and variable costs relate to cost structure rather than the specific process evaluation tied to standard costing. Revenue growth and projected sales figures address broader financial performance and forecasting, which do not explicitly link to the methodology used for setting and analyzing standard costs.