Discussion
Standard cost is developed by :
Answer: A
The keyed answer is Adjusting price level changes in the prices of material and labour etc.
A standard cost is a predetermined cost of what a unit should cost under efficient conditions. It is built up from standard quantities of material, labour and overhead multiplied by standard prices, and those prices are set by taking current prices of material and labour and adjusting them for the price-level changes expected in the coming period.
The other options do not build up a cost. Adding a profit margin to actual cost gives a cost-plus selling price; interpolating the market price with expected profit, or adjusting the market price, works from selling price rather than from the inputs of material and labour.
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