The use of standard costs will most likely impact the projection of the gross margin for a manufactured item.
Standard Costs: These are predetermined costs based on the estimated costs of materials, labor, and overhead for a product. They serve as a benchmark for measuring performance and controlling costs.
Gross Margin Projection: By using standard costs, companies can more accurately project the gross margin of manufactured items. Gross margin is calculated by subtracting the cost of goods sold from sales revenue, and standard costs help in estimating the cost of goods sold more reliably.
Cost Control: Standard costs facilitate better cost control and variance analysis, allowing companies to identify deviations from expected costs and take corrective actions.
Reference:
Horngren, C.T., Datar, S.M., & Rajan, M. (2014). Cost Accounting: A Managerial Emphasis. Pearson.
Drury, C. (2018). Management and Cost Accounting. Cengage Learning.