Standard costing and budgetary control , Managerial Accounting

Assignment Help:

STANDARD COSTING AND BUDGETARY CONTROL

In practice, the terms standard cost and budgeted cost might be used interchangeably. Whereas it is possible to have budgeting without standard costs, it is not possible to have standard cost system without total cost budgeting system.

Standard costing and budgetary control are interlinked items. Once standard cost has been determined and is relatively easy to compute budgets for production costs and sales and, when actual figures differ from expected standards, to calculate variances, to provide a basis for control reporting.

A standard cost is an average predictable unit cost. It is set using the best available estimates and cannot be expected in practice that actual results will conform to standard. Variances must therefore be expected to fluctuate randomly within normal limits. Such random fluctuations need no investigation and tolerance limits are set (investigate only those variances which exceeds Sh.x or y% of the standard cost).

Standard costing is appropriate in any situation where the same resources are used over and over again in the same way. It is therefore particularly appropriate for manufacturing businesses producing large numbers of identical items, especially where the same operations are combined in different ways to produce different products. It also has applications in service businesses that involve repetitive operations.

Installing a standard costing system entails designing an information system that can collect and analyze details about activities in such a way that the standards can be set and applied. In effects this means collecting quantitative data about the use of resources.


Related Discussions:- Standard costing and budgetary control

Working capital management, literature review of effects of working capital...

literature review of effects of working capital on financial performance?

Comparing between real and planned outcomes , Comparing real and planned ou...

Comparing real and planned outcomes and responding to Divergences from Plan The final phases in the process outlined in figure shown below of comparing real and planned outcome

Determine the companys bid, King Manufacturing has four categories of overh...

King Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are as follows: Maintenance

150 to 200 words, solutions for (POS) slow printing of sales tickets and un...

solutions for (POS) slow printing of sales tickets and unpredictable action of cash drawers. when credit approvals delayed the checkout process or when the computer was down, thus

Benefits/ disadvantages of the costing techniques , Question 1 A healt...

Question 1 A healthcare company specializes in hip, knee and shoulder replacement operations, known as surgical procedures. As well as providing these surgical procedures, the

Financial manager''s role in inventory management, Financial manager's role...

Financial manager's role in inventory management The techniques of inventory management are very useful in determining the optimum level of inventory and finding answers to the

Incremental budgeting, the suitability of incremental budgeting to a stable...

the suitability of incremental budgeting to a stable and static environment

Bussiness.., #queThe following information pertains to Fairways Driving Ran...

#queThe following information pertains to Fairways Driving Range, Inc.: The company is considering operating a new driving range facility in Sanford, FL. In order to do so, they

What are selling and distribution expenses, What are Selling and distributi...

What are Selling and distribution expenses? Selling and distribution expenses incurred for the marketing of a commodity, for securing orders for the articles, dispatching goods

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