Advantages-disadvantages-standard costing, Managerial Accounting

Assignment Help:

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.

 


Related Discussions:- Advantages-disadvantages-standard costing

Maximum Price company would pay, Cause Company is planning to invest in a m...

Cause Company is planning to invest in a machine with a useful life of five years and no salvage value. The machine is expected to produce cash flow from operations of $20,000 in e

Working capital management, A managerial accounting strategy focusing mainl...

A managerial accounting strategy focusing mainly on maintaining efficient levels of both components of working capital that is current assets and current liabilities, with respect

Eoq mathematical model, EOQ mathematical model As costs of ordering and...

EOQ mathematical model As costs of ordering and holding stock are equal at the EOQ point, we can build a simple mathematical model to solve the problem, as follows: (Q/ 2) X

Mba, Describe the impact of different types of standards on motivations, an...

Describe the impact of different types of standards on motivations, and specifically, the likely effect on motivation of adopting the labor standard recommended for Geeta & Company

Determine the creditors turnover ratio, Creditors turnover ratio ( or payab...

Creditors turnover ratio ( or payables turnover ratio) Meaning: this ratio establishes a relation ship between net credit purchases and average trade creditors. Objective

Definition of activities based costing, Definition of Activities based cost...

Definition of Activities based costing Activity based costing is a system that focuses on activities as the fundamental cost objects and uses the costs of these activities as b

Explain cost flow in activity based costing, Normal 0 false f...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

State the factors of cvp, State the factors of CVP The three factors of...

State the factors of CVP The three factors of CVP analysis I e cost volume and profit are interconnected and dependent on one another . for example profit depends upon sales se

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd