Standard cost and standard costing, Cost Accounting

Standard Cost and Standard Costing

To effectively control the costs of a certain organization, we require a yard stick to measure the real performance against. Traditionally, most organizations are identified to employ the previous period costs as the yardstick. But however the fast changing business environment of the world businesses operate in today, managers always determine that the previous period's performance is not a suitable yard stick to measure the next and future periods' performance against. This is why mainly organizations develop standard costs.

Therefore standard cost is a yardstick such measures how well the organization has achieved its set objectives. This easy definition standard cost implies that a standard cost is developed minimally for performance evaluation and cost control reasons. Therefore a standard cost has to be developed in advance before the real performance to be measured begins; for this purpose, a standard cost is a predetermined costs based on specific assumptions, the reader has to appreciate the fact is a standard costs is a mere estimate of expected costs under specific conditions. From the above discussion, a standard costs clearly comes out like a cost set before the actual cots are in fact incurred. Therefore some scholars refer to it like the "cost level that must be" under acceptable, attainable performance situations. Others refer to standard costs like carefully predetermined costs of production utilized as a basis for comparison and measurement.

Posted Date: 2/7/2013 5:03:53 AM | Location : United States







Related Discussions:- Standard cost and standard costing, Assignment Help, Ask Question on Standard cost and standard costing, Get Answer, Expert's Help, Standard cost and standard costing Discussions

Write discussion on Standard cost and standard costing
Your posts are moderated
Related Questions
Morrow Company applies overhead based on direct labor hours. At the beginning of the year, Morrow estimates overhead to be $620,000, machine hours to be 180,000, and direct labor h

Reasons for Cost Allocation 1. To provide comparison along with externally provided services:  It helps in assessing where to continue the contact or service outsiders. 2.

A company has developed a new product which it will launch next month. During the initial production phase the company expects to produce 6,400 units in batches of 100 units. The f

Effects of differential cost analysis in decision making

a company wants to buy a new machine to replace on which is having frequent breakdown.............. .......... c-the models suitable for different levels for demand of product?

Changes in Product Mix A change in product mix in which individual products have different contribution will contain different contribution. Sales ratio will conclude in a cha


7. The Isabelle Corporation rents prom dresses in its stores across the southern United States. It has just issued a five-year, zero-coupon corporate bond at a price of $74. You ha


Allocation of Overhead Costs Allocation of overheads is the term utilized where the overhead cost item can be charged to a exact cost center without the requirement for any es