Question

Define Standard Costing. Explain its
Limitations.​

Answer 1

Answer:

It is a method of costing by which standard costs are employed. According to ICMA, London, Standard Costing is “the preparation and use of standard costs, their comparison with actual cost and the analysis of variances to their causes and points of incidence”.

According to Wheldon, it is a method of ascertaining the costs whereby statistics are prepared to show:

ADVERTISEMENTS:

(i) The standard cost;

(ii) The actual cost;

(iii) The difference between these costs which is termed the variance.