Preset costs for delivering a product or service under normal conditions are called:

• A. Variable costs
• B. Actual costs
• C. Standard costs
• D. Overhead costs

Answer: (C)

Verified step by step guidance

1. Understand the concept of 'Standard Costs': These are preset costs established for delivering a product or service under normal operating conditions. They serve as benchmarks for measuring performance and controlling costs.
2. Differentiate between the given options: Variable costs change with the level of production, actual costs are the real expenses incurred, and overhead costs are indirect costs not directly tied to production.
3. Recognize that 'Standard Costs' are used in budgeting and cost control to compare expected costs with actual costs, helping businesses identify variances and improve efficiency.
4. Relate the term 'Standard Costs' to its practical application: It is commonly used in manufacturing and service industries to set cost expectations for materials, labor, and overhead.
5. Conclude that the correct answer is 'Standard Costs' because they represent the preset costs under normal conditions, unlike the other options which describe different types of costs.