Advantages-disadvantages-standard costing, Managerial Accounting

The advantages and disadvantages of standard costing

The benefits for controlling having a standard costing system in operation can be summed up as follows;

  • Cautiously planned standards are a help to more precise budgeting.
  • Standard costs give a yardstick against that real costs can be measured.
  • The setting of standards includes determining the best materials and techniques which might lead to economies.
  • A target of effectiveness is set for employees to arrive at and cost-consciousness is stimulated. 
  • Variances can be computed that enable the principle of management by exception to be operated. Only the variances that exceed acceptable tolerance limits require to be investigated by management with a vision to control action.

 

The disadvantages of standard costing include the following:

  • It is difficult to set accurate standards.
  • The collection and analysis of data to run a standard costing system may be very time-consuming.
  • Standards may be seen as a pressure device.

 

Posted Date: 12/7/2012 8:27:32 AM | Location : United States







Related Discussions:- Advantages-disadvantages-standard costing, Assignment Help, Ask Question on Advantages-disadvantages-standard costing, Get Answer, Expert's Help, Advantages-disadvantages-standard costing Discussions

Write discussion on Advantages-disadvantages-standard costing
Your posts are moderated
Related Questions


Cash management is related along with the management of: Cash outflows and inflows of the firm Cash flows inside the firm Cash balances as financing deficit and inve

A company manufactures a one product. Estimated cost data regarding this product and other information for the product and the company are as follows: Sales price per unit Rs.2000

Explain the concepts of costs. A cost accountant is mainly concerned with the following cost concepts. 1. Concept of objectives: it is this concept that gives direction to

Categories of zero base budgeting The preceding discussion will reveal that zero base budgeting is based primarily on: 1) Development of decision units 2) Identification

M/s ABC is seeing relaxing its collection efforts. At current its sales are as Rs.40 lakhs, the ACP is here 20 days and variable cost to sales ratio is .8 and bad debts are as .05

Discretionary fixed costs and Semi variable costs Discretionary fixed costs are those which are incurred as a result of management discretion. These costs have two importan

Battle of the Sexes game To understand Battle of the Sexes game, let’s consider a story as follows: Two players (a couple) wish to go to an event together but disagree about

One of the main deities of the financial manager is to keep a sound liquidity position for the firm hence the dues are settled as and while they mature. Separately from this the fi