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Standard Costing System

Standard Costing. It is also known as variance costing.Standard cost- Predetermined costStandard Costing- is a management accounting tecnique to analyse variances. www.professoraugustin.com. Steps in Standard costing. Set standard costStudy the actual costCompare the actual with the standard co

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Standard Costing System

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    1. Standard Costing System Unit-13 Managerial Accounting Concepts and Empirical Evidence www.professoraugustin.com

    2. Standard Costing It is also known as variance costing. Standard cost- Predetermined cost Standard Costing- is a management accounting tecnique to analyse variances www.professoraugustin.com

    3. Steps in Standard costing Set standard cost Study the actual cost Compare the actual with the standard cost Which gives variances Analyse the variances Fix responsibilities Take suitable action and create effective control system . www.professoraugustin.com

    4. Management Accounting-Module-II Marginal costing, Budgeting, standard costing and Uniform costing www.professoraugustin.com

    5. Similarities and Difference between Budgetary control and standard costing Similarities: 1.Both the tools available to the management for the purpose of controlling the costs 2.Both based on setting standard, comparison with actual and study the variance 3. If standard costing prevails in the company then budgetary control is effective. www.professoraugustin.com

    6. Differences 1.Budgetory control can be operated without standard costing 2.Budgets gives the limits on expenses but standard costs are minimum targets to be attained. 3.Budget can be prepared for various areas of activities but standard is used for production and manufacturing cost 4.Budgetary variances may point out efficiency or inefficiency.But standard costing goes beyond The efficiency or inefficiency and find out the root cause for the variance. 5.Standard is always for improvement. Budgets are based upon the future or estimated costs.But standard costs are ideal costs under ideal situation. www.professoraugustin.com

    7. Types of standards 1.current standard 2.ideal standard 3.Expected standard 4. Normal standard www.professoraugustin.com

    8. Analysis of variances

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