The correct answer is: A. short period
A standard cost is a predetermined cost that is used to control costs and evaluate performance. It is established for a short period of time, typically one year. This is because standard costs need to be updated regularly to reflect changes in prices, technology, and other factors.
Option B is incorrect because the current period is too short a time frame to establish a reliable standard cost. Option C is incorrect because standard costs are not established for an indefinite period of time. Option D is incorrect because a predefined period is not a specific enough time frame to establish a standard cost.
Here is a more detailed explanation of each option:
- Option A: short period
A standard cost is a predetermined cost that is used to control costs and evaluate performance. It is established for a short period of time, typically one year. This is because standard costs need to be updated regularly to reflect changes in prices, technology, and other factors.
- Option B: current period
The current period is too short a time frame to establish a reliable standard cost. This is because costs can fluctuate significantly from one period to the next. For example, the price of raw materials may increase or decrease significantly over the course of a year. As a result, a standard cost that is established at the beginning of the year may not be accurate by the end of the year.
- Option C: indefinite period
Standard costs are not established for an indefinite period of time. This is because standard costs need to be updated regularly to reflect changes in prices, technology, and other factors. For example, the price of raw materials may increase or decrease significantly over time. As a result, a standard cost that is established one year may not be accurate five years later.
- Option D: predefined period
A predefined period is not a specific enough time frame to establish a standard cost. This is because standard costs need to be updated regularly to reflect changes in prices, technology, and other factors. For example, the price of raw materials may increase or decrease significantly over the course of a month. As a result, a standard cost that is established at the beginning of the month may not be accurate by the end of the month.